Housing stock in the U.S. is getting older and construction of new homes is not keeping pace with demand. If things don’t change the nation could be faced with severe housing shortages, while older buildings may fail to keep up with current safety standards.
According to an Urban Institute report from April 2018, the supply of new homes built in 2017 was around 350,000 less than needed to meet demand. This means that pressure on older homes in the sales pipeline has increase, the National Association of Home Builders reported last week.
Just six out of every 1,000 homes built before 1970 is removed from the housing stock each year, the NAHB said.
“In the long run, loss rates as small as this are not sustainable, of course, as that would imply half of new homes built in some regions last 1,000 years,” NAHB researchers noted in the blog post. “But in the medium term, it may be possible to keep removal and production rates as low as they are right now.”
Unfortunately this means that U.S. housing stock’s future is murky at best. Should homebuilding continue to perform at the same current low levels, just 16 percent of the stock would consist of new homes in 20 years’ time. As such, 45 percent of all U.S. homes would have been built before 1970 at that point, with the number as high as 65 percent in some parts of the country.
This would mean that many homes are not up to code, the NAHB said. For example, in the 1970s, codes and standards for energy efficiency didn’t exist. Many new codes around fire safety also only came into effect after 1970.
“New homes are being built to higher standards than they were in 1970,” the NAHB said. “So if you want to improve the built environment, one of the first things you need to do is figure out simply how to increase the production of new homes, built to modern standards, so it becomes possible to retire more of the older homes.”