The US labor market may have experienced positive changes over the years, however, the housing market's supply of new homes is insufficient to match the rising number of workers. This is based on a recent study by the National Association of Realtors (NAR).
The NAR study tracked the housing starts and employment growth in 146 metro areas from the period between 2012 and 2014. The report indicated an insufficient supply of newly constructed homes in most metro areas, given the low rate of housing starts. Some 63 percent of the markets measured by NAR exceeded the ratio of one home for every 1.2 jobs or workers for all housing types. For single family units, 72 percent of the measured metro areas also surpassed the ratio of 1.6 jobs.
Lawrence Yun, NAR chief economist, said that low inventory has been a prevailing concern in the U.S. housing market in recent years, reports PR Newswire. He also mentioned that the research showed how "homebuilding failed to keep up" with the positive changes in the labor market. The NAR chief economist stated that the housing inventory shortage has contributed to the "stronger price appreciation and eroding affordability currently seen throughout the U.S."
Yun added, "Affordability issues for buying and renting because of low supply are already well-known in many of the country's largest metro areas... Additionally, our study found that limited construction is a widespread issue in metro areas of all sizes."
A report from Realtor.com mentioned that the rising home prices in recent years is tightly connected with job growth and is one of the "fundamental drivers of housing demands," according to the site's chief economist, Jonathan Smoke. This trend won't likely end any time soon given the current level of home construction. Smoke said, "The level of new construction is losing more and more ground as the race goes on. Supply will remain tight and thus prices and rents should continue to appreciate at above long-term average rates."
Meanwhile, the NARs study showed that the top five metro areas with high employment numbers but low housing inventory are three California states namely, San Jose, San Francisco and San Diego. The other two are New York and Miami.
