The big difference in this housing recession versus other cycles is that housing completions are still rising, which is unusual. However, because of the COVID-19 delays, we are still working through a backlog of homes under construction.
From Census: Housing Completions Privately‐owned housing completions in March were at a seasonally adjusted annual rate of 1,542,000. This is 0.6 percent (±13.3 percent)* below the revised February estimate of 1,552,000, but is 12.9 percent (±18.6 percent)* above the March 2022 rate of 1,366,000. Single‐family housing completions in March were at a rate of 1,050,000; this is 2.4 percent (±12.4 percent)* above the revised February rate of 1,025,000. The March rate for units in buildings with five units or more was 484,000.
As you can see below, completions are like a slow-moving turtle, but they are still rising, so while housing permits are falling, consistent with the housing recession, housing completions are a different story.
Now the data line that excites me the most, of course, is shelter inflation, meaning the growth rate of rent inflation, because it’s cooling down already. This is something I talked about on CNBC
What is the best news for mortgage rates long-term? It’s getting more supply of apartments! The best way to fight inflation is always by adding more supply; if your goal is to destroy inflation by killing demand, that is only a temporary fix.
Housing inflation post-2020 was one for the record books, not only because home prices accelerated in such a short time, but more importantly for the inflation data, rents took off, something that didn’t happen during the housing bubble years.
The government accounts for housing inflation by looking at rents, not home details ⇒
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