“I anticipate that these housing supply issues are unlikely to reverse materially in the short term, which suggests that we are likely to see higher inflation from housing for a while,” Bowman said.
Sales of new single family houses in the United States jumped 14% in the month to September as buyers tried to beat a potential hike in interest and mortgage borrowing rates despite record high home prices, Commerce Department data showed.
The median selling price for existing-homes in the United States rose 17.8% in July from a year earlier to hit a record high of $359,900, according to the National Association of Realtors.
The S&P CoreLogic Case-Shiller US National Home Price Index said its 20-city indicator showed a 19.7% year-over-year gain in August, barely changed from the 20% reading in the previous month.
The US economy shrank by 3.5% for all of 2020 due to shutdowns and other disruptions caused by the COVID-19 crisis. Growth this year has been spotty, with an annualized 3.5% expansion in the first quarter, 3.6% in the second and 2.0% in the third.
Besides uneven economic growth, the Federal Resrerve has faced three other problems. The first is inflation as wages and the prices of almost everything have soared from the lows of the coronavirus pandemic, especially pump prices of gasoline now at seven-year highs. The second is slower-than-expected employment growth, with at least 5 million of the about 21 million jobs lost last year not having returned due to conditions forced by the pandemic. The third is the continuous disruption in supply chains as the output of building materials and electronic components remains challenged.
Dire housing shortages in the United States since the financial crisis of 2007-2008 and last year’s coronavirus outbreak have sent home prices to record highs.
Despite the grossly inflated market and a huge mismatch of demand versus supply, many buyers remain hopeful of locking in before the Federal Reserve raises interest rates sometime next year in what would be its first hike since the COVID-19 outbreak in March 2020.