US housing market has 'big hole' to dig out of, economist says
After a few years of recurring obstacles in the real estate industry, homebuyers are being presented with another challenge: a housing inventory shortage.
"We’ve got a big hole to dig out of," Realtor.com chief economist Danielle Hale said while discussing the volume of new homes being built during "Mornings with Maria" Wednesday.
"We do expect to see single-family construction tick up next year by about 0.4%. So not a huge gain, but construction right now is on the upper end of what we've seen it do over the last, really since 2012," she explained.
Hale remains optimistic about the new unit inventory, arguing the industry will see an improvement, but said it’s a "multiyear problem."
FILE-A for sale sign hangs in front of a home on August 22, 2023 in San Mateo County, California. (Photo by Liu Guanguan/China News Service/VCG via Getty Images)
"So, if we took all that construction and put it towards filling that deficit, it's going to take us a few years to build out," she expressed.
As the industry grapples with an inventory shortage of new homes, the idea of owning a home for some first-time buyers remains a distant reality.
"Our October data shows listing prices were flat," Hale told FOX Business, adding that home prices over the past couple of months have "waffled."
Confidence among builders in the U.S. housing market plunged for the third straight month in October as a spike in mortgage rates continued to weigh on consumer demand for new homes.
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"We do expect home prices to begin to decline more consistently in 2024. But we're not talking a big break because of this shortage of inventory. We're expecting 1.7% for the year," she said.
Unfortunately, homebuyers aren’t the only demographic facing challenges in the real estate sector.
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Those who are opting to rent are not going to "get a big break," according to Hale.
"Relative to high costs in the housing market, I think renting is going to be an option for many families who are trying to figure out how do I save on housing costs," Hale explained.
"There really aren't a lot of ways to save on housing costs," she stressed.
FOX Business’ Kristen Altus contributed to this report.