Does the U.S. now have a housing shortage?

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You’ve seen the evidence, especially if you have been out looking for a home this summer. Houses aren’t staying on the market long.

But don’t take that as a sign of an overheating housing market. Instead, Jonathan Smoke, chief economist for, says the market is suffering from a lack of inventory. Writing on the website, Smoke said stats show home searches in June were up 13% while the inventory of available homes was down 5%.

That, he says, is a recipe for continued rising home prices. He said a survey of buyers showed 40% found the biggest obstacle to buying a home wasn’t raising the down payment, but finding a home they wanted to buy.

Oddly, home builders aren’t helping out. New home construction remains at about half the level it was during the housing boom, despite declining inventory and rising demand.

“So it’s not surprising that this low level of inventory—along with the rapid-fire speed at which homes are selling and the high level of price appreciation—has led to the general perception that we’re in a seller’s market,” Smoke wrote in his blog. “Fair enough. But that doesn’t mean it’s all smooth sailing for sellers either.”

Sellers become buyers

That’s because people who sell their homes have to move in somewhere else. In most cases, that makes them buyers, competing with other buyers for the dwindling number of homes.

If demand is growing and supply is not, doesn’t that eventually lead to a housing shortage? The National Association of Realtors raised that concern as early as a year ago, when it issued a report noting homebuilding had not kept up with the pace of employment.

“In addition to slow housing turnover and the diminishing supply of distressed properties, lagging new home construction — especially single family — has kept available inventory far below balanced levels,” NAR chief economist Lawrence Yun said last September. “Our research shows that even as the labor market began to strengthen, homebuilding failed to keep up and is now contributing to the stronger price appreciation and eroding affordability currently seen throughout the U.S.”

Nearly a year later, that trend appears to be picking up steam.




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