Residential construction spending dipped slightly last month, but take a look at the longer term:
The pre-pandemic growth trend is strong because it was a rebound from the 2006-09 housing bust. But post-pandemic growth is even stronger. Adjusted for both inflation and population growth, residential construction is 20% higher than in 2002 and 28% higher than just before the pandemic.
Everybody is promising to build more houses, and that's a good idea. But the free market is already doing a decent job of responding to demand. A little nudge is probably all it needs.
The Trump Misdirection Campaign (tm) will undoubtedly bang away at the fact that residential construction is less now that it was two years ago, so naturally house prices have skyrocketed, and that's why so many people can't afford their houses. It's the Biden Bust in home construction, they will say, and the bullshit will be swallowed by anybody who discovers that (surprise, surprise) a new house is expensive.
Not my specialty, but IIRC the problem is not so much the monetary VALUE of housing created as it is the TYPES of housing created and WHERE they are created.
Again IIRC, there are, for example, far too many large "McMansions" being built (often on small lots) in suburban / collar / exurban areas (along with too little infrastructure development, notably of arterial roadways and transit, and also nearby retail / commercial areas), and there are far too few "starter homes" (which also are good for older people who no longer live with many family members), too few affordable homes in general, and too few units in already moderately-dense or dense areas (eg inner suburbs and cities) leading to further overload on roadways from collar / exurban areas.
And these problems tend NOT to be as amenable to purely market soutions, because the financial profit in the overbuilt types and places is high and the political / regulatory costs low, while in the areas that need housing but aren't getting it the reverse is often true.
Yep, looking at overall spending on homes is a misnomer. That says nothing about even something as simple as the quantity of housing. Let alone all of the nuances you brought up.
Construction of units is still at a historic low:
https://fred.stlouisfed.org/series/HOUST
On an absolute basis it has seldom been lower since 1959 and per capita it is even lower. On the other hand the population is not increasing as fast as it was.
Even if actual construction is not a lot more expensive, houses are bigger and there are other things that add to cost. They aren't making any more land, especially where there are good jobs. Total expenditure is probably not the best measure.
Are you implying with your parenthetical that we can equally call them "starter homes" or "ender homes"?
I had forgotten that this blog does not thread comments so that you can easily see the dialogue between specific comments. Mine of 9/3/24@1:48PM was directed to that of bbleh at 9/3/24@11:43AM
Sorry.
"...blog does not thread comments..."
Marcel, I'm not sure what that means, but I suspect you may have overlooked something. At the end of the comment stream there is a Comment window to reply at the "01 Level" to the original post. Also, after every comment already posted, there is a lower-level Comment window to reply directly to the comment it follows. Those lower levels can increase, with additional commenters adding their additional comments *within the thread.* It's up to us commenters to create a thread if we choose to.
Additionally, it's always been a blogging standard that if you are replying to a specific comment upthread of yours within the same thread, you prefix your comment with a note "@ WhatName:" so that your intent will be clear.
Yes.
Again not my specialty, but IIRC, prices of such homes have not been as volatile as other parts of the market, in part because supply is more limited as noted, but also because demand has remained strong, not just from first-time buyers but from "downsizers." Such homes tend to have fewer rooms, smaller footprints, lower maintenance requirements, lower taxes, and as such often are more appropriate for older folks / couples who no longer have children living with them and don't want the hassle and expense of keeping up the big place they used to need.
That per capita doesn't mean there's more building; it could simply mean a move towards market rents or luxury condos and apartments, and away from affordable and low-income housing.
That dip corresponds to the Fed benchmarks increase, and so projects with the smallest margins -- affordable and low-income housing -- gets dropped or delayed.
Wow, our prayers have been answered. Finally, the market solution has appeared.
We are spending more to build fewer houses!!
Hmmm...wait a minute.....
"A little nudge"
Fucking lol, unless by "little nudge" you mean "wave a magic wand and create 5M new units right now, tomorrow."
Is this really the "free market" at work? There's been billions in state and federal money going into residential construction--and not just units but items like appliances and solar panels--the past few years. Also, I'm not sure accounting for the inflation rate captures the cost overruns in housing construction, which I've seen run 25% or more. So plenty of money is getting spent/made on housing construction, but I'm not so sure this is translating into the units needed to meet demand.