First of all Happy Halloween!
Today I heard from our housing pundits the predictable statements that we have record breaking demand for housing but not enough workers to build more homes.
When you hear statements like this, please keep in mind the following: In October of this year we have more construction workers then we did in 1994 or 2000, when demand was booming.
October 2017 6,911 Thousands of Persons
October 2000 6,814 Thousands of Person
October 1994 5,177 Thousands of Persons
During those times in 2000 and 1994 we also had a lot more housing starts with less workers.
October 2017 1,127,000
October 2000 1,549,000
October 1994 1,450,000
Construction wages are at all time highs
Average Hourly Earnings of All Employees: Construction $29.19
Average Hourly Earnings of Production and Non-supervisory Employees: Construction $27.20
Monthly supply of new homes (inventory of homes waiting to be purchased) in this cycle has always been higher every month compared to the previous cycle.
If we take a look at demand for new homes, adjusted for population, with a 6 month moving average we can see that we simply don’t have the demand to warrant more building yet. This will change when demographics get better for home buying.
As much as a I harp how wrong the great American recession bears have been with their bad macro-economic theories, the housing community in getting away with bloody murder with this thesis. Happy Halloween!
Stay safe and enjoy your evening everyone!
Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami is a senior loan officer at AMC Lending Group, which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data daily on his own facebook page https://www.facebook.com/Logan.Mohtashami