Homebuilder Backlog Gets Even Worse in January

Number of the Day: The most relevant or interesting figure in personal finance

Number of the Day

That’s how many home construction projects have building permits but haven’t been started yet—the biggest builder backlog since at least 1999. 

The nation's backlog at the end of January compares to 267,000 at the end of December, 204,000 a year ago, and fewer than 100,000 a month for a long stint after the financial crisis, data released by the Census Bureau Thursday showed. Despite rising mortgage rates, buyers seem to want more new homes than builders can actually construct, given supply and labor shortages, according to economists.

That newly built homes are highly coveted should come as no surprise to anyone who’s looked at the real estate listings lately, where an ever-growing share of the listings is new construction. The reason behind the trend is fairly straightforward: the number of existing homes on the market has never been smaller, so people on the move often have little choice but to build something new, said Douglas Duncan, chief economist for mortgage giant Fannie Mae. 

There are a few reasons that you can’t find a house to buy these days, Duncan said, but the biggest may be last year’s record low mortgage rates. 

“No one alive had ever seen that number for 30-year fixed rate mortgages since they were initiated back in the 1930s,” Duncan said. “They were never two-and-a-half percent.” 

And even though rates have now risen back to pre-pandemic levels, they haven’t risen fast enough or high enough to stop the housing market’s momentum, said Ryan Sweet, an economist at Moody’s Analytics in a commentary.

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