Not one, but two decades worth of damage has been done

Homebuilders have a lot catching up to do after 2019’s housing shortage.

According to realtor.com, there will be home sales declines, not because of weak demand for homes, but largely due to a shortage of supply. And that’s not just from 2019.

The report released this week suggests that builders need to act fast in order to make up for the lost supply.

The report says that since 2001, 17.6 million single-family homes were built, while 20.2 million households have been formed. This means that there has been a cumulative supply shortage of 2.6 million units.

And it’s situations like this – a shortage of homes and a rise in prices of the remaining homes – that lead to low apartment vacancies.

Over the last 20 years, home building has remained inconsistent. An average of 8.5 homes per 1,000 households were built. In this same time frame, the aforementioned 20.2 million households formed, meaning about one home was built per 1.15 new households.

Between 2001 and 2005, a total of 7.5 million single-family homes were constructed. Meanwhile, about 6.4 million new households were formed, realtor.com said. This amounts to about one home built per 0.9 households formed. At this point, homebuilding was slightly, yet consistently, outpacing household growth.