What is going on with housing? Supply is extremely constrained, houses are sitting on the market for record low periods, and months to clear inventory is at all time lows, and units on the market for this time of year are at all time lows. Ok, so housing supply is limited... or is it?
Housing completions for 2020 were at multi year high- the September peak (annualized at 1.4 million units finished) is the highest reading since October 2007. Link
Total housing inventory in the US is at all time highs and on trend for the last 9 years despite the pandemic. Link
Rent in major cities rose ~2% in 2020, down from ~4% trend growth leading in. Link
Forward looking- new housing permits in January ‘21 hit a rate not seen since mid 2006 and were 23% higher than housing permits in Jan ‘20, and 44% higher than Jan ‘19. Link
So it does not appear that supply on its own is the issue here- the home vacancy rate is where I will start an explanation because its collapse is so dramatic. The vacancy rate was tied for an all time low at 1.4% in 2019- and it dropped to 1% in 2020, that is a 28% decline from an all time low to a new all time low. This is not explained by a large increase in households- in fact total households declined in the US during 2020 (slightly) and since we have expanding housing stock, and if... (More)