Brace for Impact: The Looming Housing Shortage of 2024
Download MP3 Are the Good Times Over for Home Builders?
Recent articles suggest that home builders are facing a tough road ahead. With interest rates surpassing 8% and potentially hitting 10%, many predict a challenging future for the industry.
Recent articles suggest that home builders are facing a tough road ahead. With interest rates surpassing 8% and potentially hitting 10%, many predict a challenging future for the industry.
Home Builder Confidence Drops
- Confidence among home builders is at its lowest, hindered by rising interest rates.
- The need for more single-family homes in the country remains critical, but new home construction is slowing.
Unique Challenges in Housing Supply
- Unlike cars, there’s no "house factory" producing homes on a mass scale.
- Existing single-family homes face diminishing supply due to age, demolition, or being held indefinitely.
- The primary source of new homes is home builders—whose slowdown spells trouble.
Impact on Home Builder Stocks
- High interest rates are impacting the stocks of major builders, with many experiencing significant declines.
- This signals a lack of confidence from both shareholders and the builders themselves in the near-term future of the housing market.
Housing Market Outlook
- A decrease in home construction will exacerbate the already critical housing shortage.
- Despite rising interest rates (from 3% to over 8%), home prices continue to climb due to limited supply.
- With builders pulling back, expect prices to rise further, making homeownership even less affordable.
Tune in as we unpack the implications of these trends and explore the broader effects on the housing market.
