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CUNA Senior Economist Dawit Kebede covered housing market trends and more on the economy in CUNA’s latest Economic Update.
“By conservative estimates we need 1.72 million homes per year for the next 10 years,” he says, adding that a Federal Reserve estimate shows the need for three million homes over that time period. “But even with this conservative estimate here is still a huge gap between this number of houses we need every year and the number of new permits we see, which was 1.52 million in August. This is down 14.4% from a year ago."
Kebede also notes affordable housing supply isn't matching population growth, a trend that has been going on before the pandemic. This was exacerbated by an increase in household income and low interest rates during the pandemic, leading to “unusually high price increases in the last two and a half years.”
There has also been reduced profit margins in the housing construction market due to: