America is currently suffering from a housing shortage. In October of 2016, 2.02 million homes were on sale - a supply of 4.2 months, versus a balanced market supply of 6 to 7 months. The inventory of houses for sale has decreased 4% over the past year. As a result of the low supply and high demand, the cost of a home has outpaced income growth. During the five year period from 2011 to 2016, the average price for a home rose by 42% while average income rose by only 17%. The only way to get over this shortage is to increase the supply of new housing by construction. It is estimated that 1.5 million new homes per year will be needed to attain a balance. The fifty year period up to 2001 did show that number, and the period from 2001 to 2006 yielded an average of 1.8 million homes. However, the recession caused a dip in construction, and only 870,000 units were built per annum from 2007 to 2016. This lowered number was not nearly enough to cover demand. Overall, the country is short by 8.3 million units. The country needs 1.7 million units a year. However, projections are only for 1.3 million homes in 2017 and 1.4 million in 2018. This, it is predicted the housing shortage may last another four years.

Key Takeaways:

• The U.S. is currently facing a shortage of homes for sale.
• High demand for houses has led to higher homes prices over the past five years.
• More houses need to be built to meet consumer demands.

"This shortage of housing inventory is the principal reason why home prices have been outpacing people’s income growth for the past five consecutive years."

Read more: https://www.forbes.com/sites/lawrenceyun/2016/12/13/housing-shortage-for-how-long/?sf46639853=1