Even as fewer homes are being sold due to a rise in interest rates, the availability of new homes remains at a historic low.
So said Christopher Hebert, the managing director of the Harvard Center for Housing Studies, in an appearance before the Senate Committee on Banking, Housing, and Urban Affairs.
Noting that home prices substantially increased in 2021, Hebert said everything changed last year when the Federal Reserve upped interest rates. Result: “By the end of 2022 home price gains year-over-year were down to 8%, with monthly trends showing prices actually following.”
Housing starts also took a dive, primarily in the single-family segment, plunging by around 30%, “ending the year at a pace close to the pre-pandemic level of around 900,000 new homes, once again below the long-term average.”
And even though home buying greatly declined last year, “the number of homes on the market has stayed near historic lows,” said Hebert.
In responding to these trends, Hebert told lawmakers that there is a “clear need for concerted efforts by the public, private, and non-profit sectors to pursue both regulatory reform and more efficient means of production to increase the supply of housing, and particularly of modest cost homes.”
More specifically, Hebert attacked what he called the “multiple barriers to added supply” mentioning in particular the need to move away from “restrictive zoning codes and approval processes.”
He pointed to the “efficient means of building homes through off-site production, and growth of the labor force” as two other tools that should be used to address the crunch.
By Garry Boulard
