Despite a decades-old housing shortage exacerbating an affordability crisis in the rental and for-sale markets, housing starts are expected to fall to about 744,000 single-family homes in 2023 as builders slow their pace of development. Builders are currently facing a deficit of about 1.5 million homes, but demand is dwindling in the wake of soaring mortgage rates, Realtor.com reports.
Luckily, home prices are expected to drop by as much as 15% peak to trough in 2023, and as inflation slows, so too will the Fed’s aggressive rate hikes.
“Typically, single-family construction tends to recover before the economy rebounds,” says NAHB Chief Economist Robert Dietz. “By the time we get to the second part of the year, we should see brighter economic conditions.”
“The fundamental challenge to housing remains a lack of homes for sale,” says Dietz. “So when affordability improves, that will create demand for new homebuilding.”
Advertisement
Related Stories
Market Data + Trends
10 States Where Home Insurance Rates Have Risen the Most
Responding to the increasing number of natural disasters, insurers are hiking prices, with some states bearing the brunt more than others
New-Home Sales
Mortgage Rates Are Up but New-Home Sales Still Solid in March
Lack of existing home inventory drove a rise in new-home sales, despite higher interest rates in March
Labor + Trade Relations
Who's Earning What in Construction
Workers in construction management roles may earn a higher median wage, but on average, lower-paid occupations have experienced somewhat faster wage growth