U.S. housing shortage will be there for 'years to come,' says the CEO, Taylor Morrison

July 9, 2021: -On Wednesday, the housing shortage that started before the pandemic will stick around for longer as market demand soars, the chief executive of home builder Taylor Morrison told CNBC.

“As the economy continues to improve, we’re going to see mortgage rates move up, and I think that should be expected. They’re not going to stay below 3% forever,” CEO Sheryl Palmer said. Hence, she added, “the lack of supply and the demand is something that will be with us in the future.” 

On Wednesday, the Mortgage Bankers Association’s seasonally adjusted index showed that mortgage demand went down for the second week in a row this week. It drops by 1.8% to its lowest level since the start of 2020. Home purchase applications and mortgage applications to refinance a home declined for the week, even though mortgage rates dipped.

Palmer expressed confidence in the “robust housing market” and sustained demand across all areas and consumer types despite those developments.

“Certainly, we see some numbers around mortgage applications, but I think we have to separate the supply and the demand that we see out there,” said Palmer. He has led Arizona-based Taylor Morrison since 2007.

“We are at multiyear lows nearly new and resale inventory, and, honestly, it’s going to be difficult for us to make up the shortage, the deficit that we’ve been building up for over a decade now,” she said.

The U.S home prices have increased sharply in the coronavirus pandemic, as booming interest for houses coincided with low inventory for sale. That’s showed affordability concerns from some observers who worry, especially about first-time buyers being priced out.

According to a recent report from the National Association, growth in housing inventory has slowed over the past decade in the aftermath of the 2008 housing crisis, creating an “underbuilding gap” of 5.5 million to 6.8 million housing units across the country since the year 2001 of Realtors.

“Additional inventory is the solution to all that ails us at this moment,” Coldwell Banker CEO Ryan Gorman told CNBC.

In June, one possible bright spot in the near term was that new listings had risen to 5.5% year over year and 10.9% compared with May, according to Realtor.com. The low listings have been seen between May and June historically.

Palmer said the low mortgage rates seen during the pandemic are factors to consider when assessing the market.