The private sector has seen 65 months of uninterrupted job growth, an encouraging sign that the economy is back from the brink, providing Americans with the financial resources they need to apply for a mortgage to purchase a house. The only problem is that the supply of houses is failing to keep pace with the number of people in the market to buy, particularly in the city, according to a newly released report from the National Association of Realtors.
Of the nearly 150 metropolitan statistical areas analyzed by the NAR since 2012, residential real estate construction activity is moving at a slower pace than job creation in 66 percent of MSAs.
Since the NAR first began keeping records on this type of data, the annual change in total workers to total building permits has been at 1.6 for single-family homes, NAR reported. But in the 2012-2014 window analyzed, 63 percent of markets had a ratio above 1.2, which suggests that new construction is underperforming.
Lawrence Yun, NAR chief economist, pointed out that this has been an issue for several years now and is preventing that balance the housing market needs to really thrive.
"Our research shows that even as the labor market began to strengthen, home building failed to keep up and is now contributing to the stronger price appreciation and eroding affordability currently seen throughout the U.S." Yun said.
On the positive side, improving job numbers are enabling more people to be approved during the mortgage process. The unemployment rate in August fell to 5.1 percent, after the economy added roughly 173,000 jobs, according to the U.S. Department of Labor. Proof of employment is one of the elements considered by lenders once a loan request is made.
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