Housing inventory missing over 6 million new homes: Zillow
There would be over six million more new homes built in the last decade if new construction remained at the same pace prior to the housing boom, according to Zillow.
There were 3.9 permits issued per 1,000 residents nationwide to construct a single-family home between 1985 and 2000. That pace fell to 1.9 permits per 1,000 between 2008 and now, said the Zillow analysis, which was based on U.S. Census Bureau data.
It would take more than five years of building at the current pace of 1.3 million homes per year just to replace the missing inventory, Zillow calculated.
The lack of new construction was a driver of the inventory shortage, which in turn resulted in higher prices and made it more difficult for first-time homebuyers to enter the market.
On an individual year basis, since 2013 permit issuance is trending higher, and it is at 2.6 per 1,000 residents for 2018.
Permits per capita issued during the boom years between 2000 and 2008 were 17.4% higher than in the previous 15 years, resulting in 1.6 million more permits issued than if the rate remained the same, Zillow noted. However, several major cities, including New York, Los Angeles, Philadelphia, Washington, Miami, Boston, San Francisco, Seattle and San Diego, issued permits at lower than historic rates during that period.
"Building activity came to a near-standstill when the housing market collapsed, and now a decade later, years of underbuilding have left a gap of millions of homes missing from the American housing stock," said Zillow Senior Economist Aaron Terrazas in a press release. "In nearly every major market today, single-family homes are being permitted at a lower rate than they were historically as builders face a number of challenges in adding new homes, including land and labor costs."
Only Houston, among the nation's largest cities, had a higher pace of permit issuances over the past 10 years (4.9 per 1,000 residents) compared with the 1985 to 2000 period (3.6). On the other hand, Las Vegas, where there was a building boom prior to the crisis, fell from 14.4 permits per 1,000 prior to the housing boom to 3.2 over the past decade. The large city with the highest rate of permitting currently is Austin, Texas, at 5.3 per 1,000, down from 6.0 in the preboom period.
Furthermore, the average age of a home sold rose as well. In 2017, the average age nationwide was 37 years since construction; for 2007, the average was 24 years.
"Historically, population growth has been met with new construction and new construction was a critical contributor to new inventory," Terrazas said. "Without a sustained pickup in permitting and construction activity, first-time buyers will struggle to gain a foothold on homeownership."