The housing market faces a shortage that won't ease for at least several years, top homebuilder CEO says
The housing shortage in the US won't get better for several years, Beazer Homes CEO Allan Merrill said.
There isn't enough labor supply to put a dent on the shortage in the near-term, he said.
"Long-term, [the housing shortage] puts a floor under demand in this country for newly built homes."
There's a housing shortage in the US and labor constraints means it will last several more years, according to the chief executive of Beazer Homes, Allan Merrill.
The US already has a multimillion-home shortage, he said an interview with CNBC Thursday, and with the Federal Reserve attempting to slow down lending and cool the economy by raising interest rates, it's hard to expect any easing of that shortage.
"Long-term [the housing shortage] puts a floor under demand in this country for newly built homes," Merrill said. "We just have this structural deficit. I don't see the mechanisms in place that are likely to close that shortage any time soon."
The exec added that affordability limits his company's ability to fully serve the current demand, and as far as building out more homes to address the shortage, he sees broader economic obstacles in the way.
"[I] just don't see that from an entitlement standpoint or a labor supply standpoint that we're likely to make a big dent in that at least over the next several years," Merrill said.
He added that Beazer Homes has seen significant reductions in lumber and commodities costs, which has been helpful in a higher mortgage rate environment. Additionally, he noted that homebuyers are generally benefitting from higher wages, which helps offset some rising household costs.
National Association of Realtors senior economist Nadia Evangelou told Insider in a recent interview that she doesn't anticipate a steep drop in housing prices anytime soon.
The recent turmoil with Silicon Valley Bank and other firms could lead to higher activity in the housing sector, in her view, as it could allow mortgage rates to fall faster than previously anticipated.
"We had expected mortgage rates to come down to the lower range of 6% sometime in the second half of 2023, but now we may see that level in the coming weeks," Evangelou said on March 15. "The housing sector reacts immediately to changes in mortgage rates. We expect some relief in affordability."
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