U.S. Home Construction Insuffient, NAR Says

Washington, DC, June 13, 2014 -- New home construction is currently insufficient in most of the U.S., and some states could face persistent housing shortages and affordability issues unless housing starts increase to match up with local job creation, according to new analysis by the National Association of Realtors.

The labor market, which is a key to overall economic health, has recovered all of the 8 million jobs lost since the recession. NAR measured whether new home construction has kept up with job creation to determine the impact of construction on housing supply. The findings, NAR said, reveal that new home construction is underperforming in 32 states and the District of Columbia.

Lawrence Yun, NAR chief economist, says there’s a strong relationship between new jobs and an increase in demand for housing.

“Historically, there’s one new home construction for every one-and-a-half new jobs,” he said.

“Our analysis found that a majority of states are constructing too few homes in relation to local job market conditions. This lack of construction has hamstrung supply and slowed home sales.”

NAR analyzed jobs created in every state and the District of Columbia over a three-year period ending in the first quarter of 2014 relative to new single-family housing starts over the same period.

Indicating lagging new home construction, 33 states (including the District of Columbia) have a ratio greater than 1.5 – the long-term average. The full graph and analysis can be seen here.

The disparity was the greatest in Florida, Utah, California, Montana and Indiana, where job creation has been particularly strong. Yun cautions that these states could face persistent housing shortages and affordability issues unless housing starts increase to match local job gains.

“A persistent lag in new home construction will lead to faster home price growth, which will negatively impact housing affordability,” said Yun.

Additionially, Realtors’ home price growth expectations in the first quarter of 20141 was generally strongest in states facing housing shortage conditions. Lack of inventory has pushed prices up and put pressure on affordability – especially for first-time home buyers.

“Realtors have an intuitive sense of how fast prices are likely to rise from on-the-field observations,” said Yun. “Their price outlook largely shows gains to be the strongest in states with slow home construction in relation to job growth.”



Other Archived Articles

Judge Ends Laminate Copyright Dispute between Home Legend and Mannington   Full Article
Rome, GA July 3, 2014 -- A U.S. District Court in Rome, Georgia ruled in favor of Home Legend in a legal dispute over similar looking laminate floorcovering. The judge ruled nature can't be copyrighted.

Job Openings at Highest Level Since 2007   Full Article
Washington, DC, July 8, 2014 -- Job openings in the U.S. rose in April to the highest level since September 2007, according to the Labor Department.

CARE Seeking Proposals for PET Market Project   Full Article
Dalton, GA, July 8, 2014 -- Carpet America Recovery Effort is seeking proposals for a 12-18 month project to demonstrate value-added uses for polyethylene terephthalate (PET) derived from post-consumer PET carpets.

Quick-Step Hosts Event for Shelter Charity   Full Article
Dallas, TX, July 8, 2014 -- Laminate maker Quick-Step recently co-hosted an event to benefit the local charity Dwell With Dignity.

Prince of Wales Hosts Wool Campaign Event   Full Article
London, England, July 8, 2014 -- To commemorate the fifth anniversary of the Campaign for Wool, the campaign's Patron His Royal Highness The Prince of Wales hosted a major celebration of wool at Clarence House.

Curacao Firm Develops New Locking System   Full Article
Willemstad, Curacao, July 7, 2014 -- Innovations4Flooring, a technology company formed last year to supply flooring installation products, said it has developed a unique locking system for flooring.

UK Carpet Recycling Presents Awards   Full Article
Birmingham, England, July 7, 2014 -- Inspiration for manufacturers to design new carpet products for recycling or reuse at end of life was a key theme at Carpet Recycling UK’s sixth Annual Conference.

Estillon Wins Export Award in Netherlands   Full Article
Uden, The Netherlands, July 7, 2014 -- Estillon, a provider of subfloors, carpet underlays and accessories, took third prize for the Fenedex Frank Hauwert Trophy.

Mortgage Rates Lowest Since Last October   Full Article
Washington, DC, July 7, 2014 -- Mortgage rates hit 4.12% for a 30-year fixed rate last week, according to Freddie Mac.

Services Sector Growth Slows Slightly in June   Full Article
Tempe, AZ, July 3, 2014 -- Growth in the services sector of the economy slowed slightly in June, according to the Institute for Supply Management services index.

Planned Job Cuts Tumble in June   Full Article
Chicago, IL, July 3, 2014 -- Planned job cuts announced by U.S. companies in June fell to 31,434, the lowest level of the year and down 20% from a year ago, according to outplacement firm Challenger, Gray & Christmas.

Economy Adds 288,000 Jobs in June   Full Article
Washington, DC, July 3, 2014 -- Employers added 288,000 jobs in June, the Labor Department said Thursday.

Cersaie Show Set for Sept. 22-26 in Bologna   Full Article
Bologna, Italy, July 3, 2014 -- Cersaie—the world’s largest exhibition of ceramic tile and bathroom furnishings—will take place at the Bologna Exhibition Center in Bologna, Italy from Sept. 22-26.

NAFCD Issues Employee Compensation Report   Full Article
Chicago, IL, July 3, 2014 -- The North American Association of Floor Covering Distributors has released the 2014 NAFCD Employee Compensation Report.

E.J. Welch Promotes Two to Vice President   Full Article
St. Louis, MO, July 2, 2014 -- E.J. Welch Co. has promoted two employees to full time management positions.

Factory Orders Fall in May   Full Article
Washington, DC, July 2, 2014 -- Factory orders fell 0.5% in May, largely because of fewer orders for military goods, the Commerce Department said.

Private Sector Adds 281,000 Jobs in June   Full Article
Roseland, NJ, July 2, 2014 -- Private sector employment increased by 281,000 jobs from May to June, according to the June ADP National Employment Report.

Goodman, CEO of Space Flooring, Retires   Full Article
Glen Burnie, MD, July 2, 2014 -- Kent B. Goodman, owner and CEO of Space Flooring, has retired, according to distributor Haines.

Mortgage Application Volume Falls Last Week   Full Article
Washington, DC, July 2, 2014 -- Mortgage application volume fell slightly last week, according to the Mortgage Bankers Association.

Kinetex Wins Grand Prize for Innovation   Full Article
Dalton, GA, July 2, 2014 -- Kinetex textile composite flooring won the Grand Prize for Flooring Solutions in the 19th Annual Product Innovations Awards presented at NeoCon.