Dive Brief:
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Home sales are flat, and prices are up. Nothing new there as the Census Bureau and the Department of Housing and Urban Development issued their joint January residential sales report this week.
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But some in the industry are starting to doubt whether those generally positive numbers are actually good news—for builders, homeowners, or the economy.
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One of them is Realtor.com Chief Economist Jonathan Smoke, who said the monthly statistics have been telling a troubling story for months: “The issue is affordability. Builders have traded higher prices and margins and steady demand for opportunity of higher volumes. Supply isn’t growing, and it isn’t helping the lack of supply on the existing-home side, so we will continue to see home shoppers report that they can’t find homes to fit their needs and/or budget.”
Dive Insight:
Smoke pointed to a three-year National Association of Realtors analysis that revealed the greatest lag in home construction is in the states that are creating the most jobs—Florida, Utah, California, Montana and Indiana. The inevitable outcome: a shortage of housing—particularly of affordable housing—unless for-sale inventory starts to jibe with job gains.
Another downside, according to NAR’s chief economist, Lawrence Yun: Low inventory will push home prices up, which could exacerbate the affordability problem and keep potential first-time homebuyers in apartments.