US housing starts, or the construction of a new house, fell more than expected in March. With buyer traffic having the best run since 2009, you’re facing some stiff competition and a low supply if you’re shopping for a home.
Still, the overall recovery of the housing market continues, particularly among single-family units, according to a new report from Deutsche Bank.
Despite their recent dip, housing starts hit a four-month high this February. The biggest driver? Single-family home building since 2007. Though the number of single-family homes still remains far from pre-recession levels, that number has been steadily ramping up — especially compared to multi-family units.
Though home price appreciation has stabilized at around 5%, it’s no easy feat to find a bang-for-your-buck home in this market, given that home prices are now close to their peak levels of ‘06-’07. Interest in home buying has also bounced back to levels seen a decade ago, as we see household formation steadily pick up among young adults and mortgage rates at historically low levels.
As millennials grow up, some of them want to own a home — for both personal and practical purposes. Seventy-nine percent of millennial homebuyers believe owning a home has a positive impact on their long-term financial picture, according to Bank of America.
With such pent-up demand for homes, it’s no surprise we’re seeing an extremely low number of homes for sale — it’s truly a seller’s market. With homeowners rightfully afraid they wouldn’t be able to find a better deal on the market than their current property, there simply isn’t enough real estate on the market to meet the demand of people eager to purchase a home.
Plus, it’s become a lot harder to get a housing loan after the financial crisis, and now prospective borrowers must have incredibly high credit scores just to get a mortgage.
There’s a wide array of reasons that homebuilders (LEN, TOL) aren’t able to keep up with the extreme demand to purchase homes. Among them, a shortage in construction workers has been a central reason. Surprisingly, however, it seems that builders have become more efficient, even if by necessity. There has been a steady decrease of workers per housing unit under construction since 2012, when many who had lost their jobs may have looked toward construction gigs.
Melody Hahm is a writer at Yahoo Finance, covering entrepreneurship, technology and real estate. Follow her on Twitter @melodyhahm.
Read more: