Daily Management Review

Acute shortage of new buildings affects US market


08/15/2018


In the coming months, a large drop in introduction of primary housing, associated with a reduction in construction permits, is expected. Such measures will inevitably lead to a growing housing deficit throughout the United States.



pixabay
pixabay
According to a joint report of the US Census Bureau and the Department of Housing and Urban Development, developers issued 1 million 273 thousand permits for the construction of new housing estates in June this year, which is 3% less than a year earlier. Permits are a serious indicator for the analysis of the future US real estate market, and, so far, the forecasts are disappointing.

"America's housing market is desperate for new construction, and the fact that there is now a reduction in the issuance of permits is a real failure," says Daniel Hale, chief economist at the largest US real estate site Realtor.com. "Our market now has to go through a long way to resume the normal level of construction and meet the needs of all buyers. "

"It is also worrying that the growth of permits is slowing not only for large apartment buildings, but also for the most popular type of housing, the so-called "single-family residences"- "House ownership is growing, prices are rising, and only people with already built careers, accumulated capital and stable income can afford such a dwelling. But young couples who are ready to start a family and live separately from their parents simply will not be able to bear such expenses " comments the chief economist of the American mortgage agency Freddie Mac in his statement on the growing imbalance between supply and demand as the main reason increase in the cost of housing. 

A large decline in construction was noted in apartment buildings and housing cooperatives. In this segment, permits have fallen by 9% compared to the previous month, and by 16% compared to the previous year.

At the same time, most of the construction, which has already begun, but has not yet been completed, has also been discontinued.

New homes in America usually cost more than second homes. This is due to high costs for land, labor and material costs.

The average cost of an apartment in a new building in May was 313 thousand dollars. This is 17% higher than the average price for a "secondary housing", which costs about 267 thousand dollars.

source: bloomberg.com






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