“Demand for new home construction remains robust as the supply of existing homes for sale remains historically tight and mortgage rates continue to be highly supportive for homebuyers despite drifting upwards recently,” Doug Duncan, Fannie Mae’s chief economist said in a statement.
“However, supply bottlenecks and labor scarcity continue to hold back a faster pace of construction. Despite the rise in starts, single-family home completions were essentially unchanged over the month, while the number of units under construction rose by 2.9 percent to the highest level since early 2007.
Eventually these homes will add to the overall housing supply, but this report showed little evidence of improvement regarding homebuilders’ ongoing struggle to keep up with demand.
The expected increase in new construction will be “a drop in the bucket,” according to Zillow economists.
“Homebuilder confidence is sky-high, and builders are doing all they can to get houses up, but supply chain snags and labor shortages are limiting progress. The gap shrunk in 2021 and will likely shrink again in 2022, but the housing shortage will be a defining feature of the market once again next year.”