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Housing Shortage in Major Markets

Single-family home construction is currently lacking in 80 percent of metro areas despite steady job creation. The low activity is creating a shortage that is curtailing affordability according to new research from the National Association of Realtors.
The NAR’s study reviewed new home construction to determine the markets with the greatest shortage of single-family housing starts. The findings reveal that single-family construction is underperforming in most of the U.S.
Lawrence Yun, NAR chief economist, says, “Inadequate single-family home construction since the Recession has had a detrimental impact on the housing market by accelerating price growth and making it very difficult for prospective buyers to find an affordable home – especially young adults,”
NAR analyzed employment growth in relation to single-family housing starts in the three-year period from 2012 through 2015. Historically, the average ratio for the annual change in total jobs to permits is 1.6 for single-family homes. The research found that 80 percent of measured markets had a ratio above 1.6, which indicates inadequate new construction in most of the country.
The top 10 metro areas with the biggest need for more single-family housing starts are New York, Dallas, San Francisco, Miami, Chicago, Atlanta, Seattle, San Jose, Denver, and San Diego. Their healthy job markets continue to attract an influx of potential homeowners, only fueling the need for more housing.
Single-family housing starts are seen as adequate to local job growth in Pensacola, Florida; Huntsville, Alabama; Columbia, South Carolina; and Virginia Beach, Virginia.

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