Hardware Retailing The Industry's Source for Insights and Information
The American housing market is facing a persistent shortage with home prices reaching record highs as affordability has decreased, according to an analysis by the National Association of Home Builders’ (NAHB) Eye on Housing. New home construction has not kept up with population growth and household formation, especially following the surge of demand following the pandemic.
Recent research from economist Edward Glaser and Joseph Gyourko found that the relationship between prices and supply has become diluted over time because of regulatory barriers and political dynamics, and the link between increasing home prices and new home constructions has weakened and even reversed in many metro areas.
Areas like Dallas, Atlanta and Phoenix are seeing a slowdown in new home construction due to factors like land use regulations, zoning restrictions and permitting processes. A recent study from NAHB revealed regulations now make up close to $94,000 of the average new home price. The South, the traditional driver of homebuilding, is weakening due to these increased barriers, slowing home building in this region.
NAHB’s estimates based on 2021 data predict the U.S. needs 1.5 million additional units to fill the housing shortage gap.
