(Bloomberg – Prashant Gopal) Across the U.S., house prices are skyrocketing, bidding wars are the norm and supply is scarcer than ever. Now the market is too hot even for homebuilders.
Demand is so fevered — and construction costs are climbing so quickly — that overwhelmed builders are suppressing orders and shifting away from fixed prices. Companies including D.R. Horton Inc. and Lennar Corp. are experimenting with blind auctions in areas such as Texas, Florida and southern California. Some smaller firms have stopped signing contracts altogether.
“We’ve shut off sales until homes are nearly completed,” said Greg Yakim, a partner at CastleRock Communities, a privately held builder in Texas. “We have huge waiting lists.”
In a global economy roiled by supply shortages, the U.S. housing market is struggling with a collision of pandemic-related forces that’s holding back new inventory just when it’s needed most. Buyers are stampeding for new homes as remote work upends employment, while soaring lumber costs and a shortage of workers are slowing construction. The result is home prices, already reaching unaffordable levels for many Americans, are set to keep rising.
Like home prices growing at 12.2% YoY while US Hourly Earnings growing at 0.3% YoY?
Well, wage growth is Michael Scott hot, hot, hot. Or not, not, not.