Key facts
- May housing starts report shows weaker construction momentum.
- Completed single-family units for sale are above 120,000, a level that historically discourages new building.
- Multifamily demand is impacted by rising vacancies and decelerating rent growth.
- Zoning laws can either constrain or promote housing production, depending on their structure.
- Inclusionary zoning policies may reduce market-rate housing production and overall unit creation.
- Rising housing costs are outpacing income growth, leading to affordability challenges for many households.
The latest housing starts report indicates a slowdown in construction activity, with completed single-family units for sale exceeding a key threshold of 120,000. This oversupply, coupled with pressures on multifamily demand from higher vacancies and slower rent growth, suggests that current inventory conditions are a more significant factor than potential zoning reforms in limiting new housing construction.
While some advocate for improved zoning laws as a solution to housing shortages, the current data suggests this may not be sufficient. The number of completed homes available for sale, currently at 122,000, is a critical indicator that historically signals builders to curb new projects. This suggests that the fundamental law of supply and demand remains paramount.