There are two factors keeping millennials out of the housing market: rising home prices and a lack of affordable, newly constructed homes for sale.
A recent report from Realtor.com found that home builders could create an entire new stock of affordable, entry-level homes, but do not plan to do so any time soon.
"Much like home buyers themselves, builders are still struggling to recover from the housing crash of ’08—dealing with lenders who don’t want to lend and higher costs for all things housing-related," the report said.
Robert Dietz, Chief Economist at the National Association of Home Builders expects construction on single-family homes to be up about 15 percent year-over-year. The Department of Commerce reported that about 647,900 new, single-family homes were completed in 2015.
“Builders are creating larger, more expensive homes for older buyers” with the money to burn, Dietz says.
Home building rebounded recently with a surge in single-family home construction, inducing starts, permits, and completions, signaling newfound confidence in the housing market and economy.
The U.S. Census Bureau and the HUD jointly released new residential construction statistics for February 2016, which showed single-family housing starts bounced back more than expected in February to their highest level in five months, led by a the largest jump in single-family units in nine years.
According to the data, February's housing starts rose 5.2 percent to an annual rate of 1,178,000, compared to January's estimate of 1,120,000. Year-over-year housing starts experienced major gains, rising 30.9 percent compared to the February 2015 rate of 900,000. Overall starts have not been this high since September 2015 when the figure was 1,207,000.
On the singe-family side, housing starts were at a rate of 822,000 in February, up 7.2 percent from the revised January figure of 767,000. Single-family starts have not been this high since November 2007 when they were at 833,000.
"The very positive single-family report further supports other housing and general economic reports that the housing recovery continues unabated," said David Crowe, National Association of Home Builders Former Chief Economist and SVP. "Low mortgage rates, increases in employment, continued US economic expansion and growing pent up demand particularly among existing home owners are supporting more single-family home building."