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Even the hottest region for housing in America can't escape the new crisis
There's a new housing crisis across the US.
In short, buyers outnumber the available homes for sale, especially in lower-priced units, and affordability is becoming a big problem.
But the housing market in the South has done better than everywhere else for the last six years.
Housing data released this week continued to show this.
On Tuesday, the Census Bureau said new home sales jumped 12.4% in July to a seasonally adjusted annual rate of 654,000, the highest since October 2007. This jump was largely due to a surge in Southern states, spanning Delaware to Texas.
New home sales in The South versus everywhere else pic.twitter.com/ijNdq4XCPI
— Matthew B (@boes_) August 23, 2016
The region also made up 41% of existing home sales in July, according to the National Association of Realtors.
Southern housing markets have outperformed others since 2010, so this is not new.
The missed story of the region's strength is the importance of immigrant workers, according to Nela Richardson, chief economist at the real-estate brokerage Redfin.
While construction jobs have struggled to recover nationwide since the Great Recession, the South, especially Texas and Georgia, has been able to count on a steady supply of labor, she said.
Land there is cheaper compared with the East Coast and West Coast, and zoning restrictions are much loser, Richardson said.
So there's a big supply component in why the South is seeing more transactions.
But this has not made it immune to a broader decline in home sales, as affordability becomes a bigger deal breaker.
(Redfin)
"There is a general and marked slowdown in July that we picked up, and it has nothing to do with the calendar," Richardson told Business Insider on Wednesday. "It has everything to do with affordability."
With low mortgage rates, the prospect of lower rates in the future no longer encourages existing homeowners to sell. That's ironically adding to the inventory crunch, as low rates equally attract lots of buyers.
"People are going on tours like crazy," Richardson said. "There's huge buyer interest. But especially in the affordable home range, whether existing or new construction, we're just not seeing the numbers."
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