On June 19, the Joint Center for Housing Studies of Harvard University released their 30th anniversary edition of the State of the Nation’s Housing report. The 2018 report highlighted some major themes including lack of housing supply, rising home prices and rents, and housing affordability.
The U.S. housing market continues to be plagued by a lack of supply of homes for sale. Months of supply available for sale is a key measure of housing supply, and is at levels that are below where they would be for the housing market to be balanced. The Harvard report points out that negative equity as reported by CoreLogic no longer appears to be a drag on sales. Negative equity shrank from 12.1 million mortgages in 2011 to 2.5 million in 2017. Rather, a factor in the low housing supply is slow growth in single-family construction that has not kept up with demand.
Low housing supply has contributed to increases in home prices. Home prices, according to the CoreLogic HPI were up by 5.9 percent for all of 2017. Prices for the lowest-cost homes (those homes priced at 75 percent or less than median) were up by 8.5 percent, compared with 4.7 percent for the highest-cost homes (those homes priced at 125 percent or more than median). Along with home price increases, there have also been increases in rents. The report highlights the CoreLogic Single-Family Rental Index (SFRI). While the SFRI is still showing increases in rent through the beginning of 2018, there has been a deceleration in the rate of increase.
The increases in home prices and rents have outpaced increase in incomes and have contributed to affordability problems. High prices and low supply constrain access to homeownership, but affordability issues are more immediate for some households. The CoreLogic SFRI shows that the lowest-cost rentals are showing the fastest rent growth, adding to affordability challenges to low-and-moderate income households. The Joint Center reports that in 2016, 38.1 million households were cost-burdened, meaning they spent more than 30 percent of their incomes on housing. While this number was down by 800,000 from 2015, it is still 6.5 million higher than it was in 2001.
We encourage you to read further details of the 30th anniversary edition of the State of the Nation’s Housing. The annual report serves as a resource for policy makers and housing industry leaders.
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