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The Truth Behind Housing Data

Hand Grabbing House BHNational home sales are falling, and according to Zillow Chief Economist Svenja Gudell, the housing industry needs to stop sugarcoating the truth behind the data: the U.S. is severely under producing housing.

According to Gudell’s reaction to August new home sales, which fell 560,000 (SAAR), down 3.4 percent from July and 1.2 percent from 2016, housing inventory is stuck at roughly mid-1990s levels despite the fact that the country has grown by more than 60 million people since that decade.

Though buying conditions are great in theory, considering jobs and incomes are increasing, and interest rates are keeping financing costs low, Gudell said a lack of homes available to buy at a reasonable price point is missing from the equation.

According to Zillow, the median, seasonally adjusted new home price is $302,100, down 7.5 percent from July and up 0.5 percent from 2016.

“We’ve been hovering roughly at or below the 600,000 annual sales level for more than a year now, when the market could seemingly easily accommodate sales levels of 750,000 or even much more,” Gudell said. “While Hurricane Harvey likely held down sales in Texas, its adverse effect on August sales was probably pretty modest at around 6,000 units.”

Given the South’s recent pattern of contributing to much of the new construction market, Gudell said it will be interesting to watch how new home construction fairs in the upcoming months after the hurricanes.

“A surge in activity could set the tone for the rest of the country to follow; a lull will only mean the prolonged new home sales slump we’ve been enduring will continue,” Gudell said.

About Author: Brianna Gilpin

Brianna Gilpin, Online Editor for MReport and DS News, is a graduate of Texas A&M University where she received her B.A. in Telecommunication Media Studies. Gilpin previously worked at Hearst Media, one of the nation's leading diversified media and information services companies. To contact Gilpin, email [email protected].
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