Choked inventory continues to drive home prices higher – at such a rate that average Americans’ paychecks simply can’t keep up.
“We’re still seeing home prices increase at twice the rate of income growth,” Mike Fratantoni, chief economist for the Mortgage Bankers Association, told CNBC today.
As home prices continue their steady uphill march, Americans’ earning power is remaining stubbornly stagnant. A recent government report showed wages growing at a disappointing 0.1%, a 2.6% advance on an annualized basis, according to CNBC. Meanwhile, home prices rose 6.2% annually. Prices nationally are now 6% higher than they were in 2006, at the peak of the housing bubble.
“The major constraint in the market right now is the lack of supply,” Fratantoni told CNBC. “The absolute number of units on the market is near an all-time record low.”
According to Fratantoni, homebuilders are trying to increase the pace of construction, but they’re still not building fast enough. And things could get even more dire as the peak of the millennial generation hits homebuying age.
“There’s just going to be this wave of housing demand hitting the economy over the next four to five years,” Fratantoni told CNBC.