Americans are binging on big houses, and it’s locking millennials out of the housing market

couple standing in front of new home

If you’re a millennial or a first-time buyer excited to purchase a starter home, you’ll probably have trouble finding one. Not only are starter homes at a 50-year low, but the size of the typical American house getting built is bigger than prior decades, which suggests starter homes aren’t just low because of supply and demand. Not enough are being built.

The US has been underbuilding for years and not keeping up with buyer demand, but less of the small starter home is being built as well.

“Due to supply-side challenges, including higher regulatory costs and limited lot availability, it has been relatively more difficult to build entry-level homes over the last decade,” Robert Dietz, chief economist for the National Association of Home Builders, told Insider in an email. “In fact, due to these factors, new home size increased between 2010 and 2014. For entry-level buyers, these factors have made homebuying more difficult by limiting available inventory.”

According to Freddie Mac data as reported on by the Wall Street Journal, there are fewer entry-level homes – homes of 1,400 square feet or less – than in decades. In fact, they have declined each decade to their current five-decade low. Per Freddie Mac’s analysis of Census data, the average number of entry-level homes built per year has declined from 418,000 in the late 1970s to 55,000 in the 2010s.

This could be bad news for millennials, as Freddie Mac notes in a May 2021 report that the generation is “at their peak first-time homebuying age.”

“We’ve got a record number of entry-level, demand buyers: the millennials coming into the market,” Sam Khater, Freddie Mac’s chief economist, told the Wall Street Journal. “And yet we’ve had a seven- or eight-year decline in entry-level homes, and that’s not going to change.”

Looking across two decades’ worth of data, supply for single-family starter homes has gone down. The following chart shows starter homes built as a percentage of total single-family homes completed.

Insider’s Taylor Borden reported that entry-level homes are great for millenials looking for something affordable, as this generation holds less wealth than their parents did at their age, but there aren’t a lot to go around these days.

At the same time, the floor area of homes being built has climbed from previous decades, although it’s gone down in recent years. The median floor area of a single-family home completed in 2020 was 2,261 square feet, per Census data.

As seen in the above chart, single-family homes have increased in size from previous years but dipped since 2015. Rose Quint, NAHB’s assistant vice president for survey research, previously told Insider this is because homes “reflected the preferences of those buyers that were still in the game.​​”

Based on Census’ housing characteristic data, 32% of the 912,000 single-family homes built in 2020 were 1,800 to 2,399 square feet, while entry-level homes made up only 7%, or 64,000, of single-family homes completed.

While the square footage of homes has climbed, lots have become smaller. A post by StorageCafé based on housing data from the Census said the typical American house is 4% bigger than 10 years ago, but the typical lot size is about 18% smaller. Lot sizes do vary, though, with Indianapolis having the largest lot size among the 20 largest US cities, per StorageCafé.

“The high demand for new housing in urban hotspots, low availability of land in those areas, growing construction costs, and Americans’ preference toward larger homes all converge, resulting in large new single family homes that make the most of their land plots,” Maria Gatea, STORAGECafé senior editor, told Insider in an email, noting median home sizes in these 20 cities have increased. “This means that first-time homebuyers have to compromise for space and move further away from downtowns.”

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Millennials are still driving a ‘roaring ’20s’ of homeownership demand, but there aren’t enough houses for them

suburbs houses
There are too many potential millennial homebuyers, and not enough homes.

A record number of millennials wanted to buy homes in 2020, but the real estate market can’t keep up.

So finds financial services company First American, which measures potential homeownership demand based on lifestyle, societal, and economic factors in what it calls its Homeownership Progress Index (HPRI). When potential homeownership demand exceeds the actual homeownership rate, it signifies that external forces are suppressing housebuying.

Its new report reveals that potential homeownership demand has surpassed the homeownership rate since 2010, following the aftermath of the Great Recession. But the difference between the two hit an all-time high during the pandemic. Demand rose from 68.8% the year prior to 70.21% in 2020, while the national homeownership rate grew from 64.7% to 66.7%.

Contrary to the popular narrative that millennials can’t afford to a buy a house because they spend too much money on avocado toast, there are more millennials trying to become homeowners than there are houses available.

Housing was largely an out-of-reach dream for millennials for years. Even before the pandemic, they were struggling to save for a down payment as they grappled with the fallout of the financial crisis and the burden of student debt.

But as the generation became more financially stable with age, its potential homeownership demand has increased by 3.5 percentage points year-over-year, per First American. That’s more than any other generation. The majority of millennials turned 30 in 2020 and the oldest turn 40 this year, signifying they’ve reached the peak age for first-time homeownership.

Read more: Millennials are getting screwed again by their 2nd housing crisis in 12 years

Not enough houses for homebuying millennials

America has been running out of houses amid a historic housing shortage. A lumber scarcity and the pandemic itself have only exacerbated the shrinking inventory, as has the wave of homebuying demand during a remote work era.

“We’ve been underbuilding for years,” Gay Cororaton, the director of housing and commercial research for the National Association of Realtors (NAR), told Insider at the end of April. She said the US had been about 6.5 million homes short since 2000, then facing a two-month supply of homes that should look more like a six-month supply. Because of this, she added, homeownership is “going to be more difficult for millennials.”

Daryl Fairweather, the chief economist at Redfin, added that there have been 20 times fewer homes built in the past decade than in any decade as far back as the 1960s. She said it’s not enough homes for millennials, who are the biggest generation, to buy.

The imbalance has propelled housing costs to several record highs, resulting in bidding wars nearly everywhere nationwide, with competing bidders throwing down all-cash bids and higher down payments. It’s become millennials’ second housing crisis during their adulthoods.

Skyrocketing prices have pushed homeownership out of reach for many millennials, despite some of their peers leading the housing recovery. While the wealthier cohort of the millennials may be better positioned to buy a home, even those who successfully managed to scrape together some savings are facing dwindling chances of homeownership.

But millennials will be driving the housing market for years to come. As Odeta Kushi, deputy chief economist at First American, wrote in the report, “While millennial homeownership has been delayed relative to their generational predecessors, millennials now have the greatest influence on the housing market and remain poised to fuel a ‘roaring 20s’ of homeownership demand.”

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Wait until 2022 to buy a house, economists say

Home for sale
People wait to visit a house for sale in Floral Park, Nassau County, New York, the United States, on Sept. 6, 2020.

  • Prospective homebuyers will face low supply and high prices for at least another year.
  • The US doesn’t have enough homes to meet demand, and builders are struggling to keep up.
  • Economists see price growth cooling in 2022, but only if construction picks up and demand holds steady.
  • See more stories on Insider’s business page.

America is still in a seller’s market when it comes to housing, and could stay there until next year.

Prices are climbing at the fastest pace in more than three decades, and homes are frequently selling above their list price, according to the National Association of Realtors. In May, the average listing was only on the market for 17 days, said Logan Mohtashami, lead analyst at Housing Wire. For it to become a buyer’s market, “For Sale” signs need to stay up for at least 30 days, Mohtashami said.

Unless construction picks up, the near-term outlook for prices isn’t promising.

Economists interviewed by Insider said price growth will remain elevated through the rest of the year and into 2022 because millennials will keep demand high – and they see the construction industry having a hard time keeping up.

Millennials are hitting peak homebuying age

In his best-case scenario, Mohtashami sees price growth cooling and supply bouncing back in 2022. But demographics complicate the outlook and could keep demand high. The surge of first-time buyers is going to be “historic,” Mohtashami said.

However, if millennial demand falls short, it could be a sign of an even larger issue. The generation’s homebuying prospects were already hammered by the Great Recession, Insider’s Hillary Hoffower reported. With the pandemic sending prices through the roof, the generation could become trapped in a vicious cycle of only renting and never having a home of their own.

“A lot of those buyers are among those for whom cost is prohibitive,” Nancy Vanden Houten, lead economist at Oxford Economics, said. “They haven’t bought a first home, or they’re paying a high rent so it’s hard to accumulate a down payment. They may also have other debts, including student debt.”

Fallout from the late-2000s housing bubble looms large

Ali Wolf, chief economist at Zonda, said more new homes should become available over the next two years, but for now, contractors are lagging.

“Builders didn’t know 2020 and 2021 were going to be some of the best years in the housing market ever,” she told Insider. “They would have needed to plan for this kind of growth in 2019. They didn’t.”

The shortage isn’t a completely new phenomenon. Home construction fell short for two decades, leaving the market with a deficit of up to 6.8 million units, according to NAR research.

Contractors “got burned” after the late-2000s bubble burst as homes away from city centers hurt their books, Zonda’s Wolf said. That damage is still top of mind and will probably hold supply back for years to come, Wolf said.

“I suspect we will continue to underbuild for years, because that deep demand pool further away from central business districts will start to shrink back to what the norm was,” she added.

Others are more optimistic. The severity of the nationwide housing shortage has captured the government’s attention. Federal and state policymakers are “more aware” of the years-long problem and its effect on inequality, Gay Cororaton, director of housing and commercial research at NAR, told Insider. That awareness could lead to zoning laws, apprenticeship programs, and funding to aid builders and boost supply, she added.

“The lack of housing is a crisis. It’s something that needs to be addressed, it just can’t go on,” Cororaton said. “It’s causing that divide between those who have and those who have not.”

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The Fed knows skyrocketing home prices are a problem, but doesn’t know what to do about it

Condo for sale sign
  • Federal Reserve policymakers have an eye on surging US home prices, meeting minutes showed.
  • Some officials “saw benefits” to tapering mortgage-loan purchases to cool the red-hot market.
  • While members chose to hold policy steady, the minutes signal the Fed may want to curb home-price inflation.
  • See more stories on Insider’s business page.

Of the various items surging in price through 2021, homes are possibly the most extraordinary.

Price growth is the strongest it’s been in more than 30 years. While demand remains elevated, builders have struggled to bring more supply to market. America’s central bank played at least some role in this incredible price inflation.

The Fed’s emergency policies dragged mortgage rates to record lows and helped spark the sharp increase in homebuying. But as prices climb to dizzying heights, some experts have called on the Fed to rein in its support. Officials at the Fed are tuned in to the problem, minutes from the Federal Open Market Committee’s June meeting showed.

Several of the meeting’s participants “saw benefits to reducing the pace” of the central bank’s purchases of mortgage-backed securities, citing “valuation pressures in housing markets.” They also suggested tapering MBS purchases earlier than Treasury purchases, a move that would counter the Fed’s past signals.

The FOMC meeting ended with policymakers electing to hold rates near zero and keep buying at least $80 billion in Treasurys and $40 billion in MBS each month.

The outlook echoes comments made in recent months by a handful of Fed officials. Dallas Fed President Robert Kaplan said in May that MBS purchases could be having “some unintended consequences” that should be weighed against their benefits.

“We don’t want to get back to the housing bubble game that cost us a lot of distress in the 2000s,” St. Louis Fed President James Bullard said on CNBC in mid-June.

Other FOMC members, however, saw reason to stay the course. Several said synchronized tapering of Treasurys and MBS purchases would be preferable, since that “would be well aligned with the Committee’s previous communications,” the minutes showed. They also noted purchases of both Treasurys and MBS helped the Fed achieve its goal of easing financial conditions.

For the moment, any policy shifts are likely months away. FOMC participants agreed to continue assessing the housing market and discussing plans for eventual tapering. Fed Chair Jerome Powell has repeatedly said that “substantial further progress” toward the Fed’s goals of maximum employment and inflation averaging 2% was required for policy adjustments.

Officials generally agreed in June the threshold hasn’t yet been met, according to the minutes. For now, then, the Fed is set to keep house prices booming. But there’s a crack in their thinking.

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Your rents are going to keep going up

Apartments for rent california
Pedestrians walk past advertising for new apartments in Los Angeles, California on October 12, 2017

  • Rent prices soared 9.2% in the first half of 2021, tripling the average pace and exceeding the pre-crisis trend.
  • Shelter inflation is set to keep climbing as millennial demand booms, analyst Logan Mohtashami said.
  • That upswing risks turning higher inflation permanent, as rent prices are tougher to rein in.
  • See more stories on Insider’s business page.

Pandemic-era rental deals are gone. Prices are shooting up, and new data suggests they’ll keep climbing at a breakneck pace.

The rally began in the housing market, where a buying frenzy dragged national inventory to historic lows and led prices to surge at their fastest rate in over 30 years. Now it’s spilling over into the rental market.

The median apartment rent in the US rose 9.2% through the first six months of 2021, rental website Apartment List said in a June 29 report. That compares to the typical first-half growth of 2% to 3%. June alone saw the website’s national rental index leap 2.3%.

The typical price nationwide now stands 2% higher than had the pandemic not taken place, according to Apartment List. That overshoot is concentrated in growing markets like Austin and San Diego, as rents in the largest metropolitan areas remain below trend.

“Whereas last year’s peak moving season was halted by the pandemic, this year’s seasonal spike appears to be making up for lost time,” Apartment List economists Chris Salviati, Igor Popov, and Rob Warnock said in a blog post.

Apartment List
Source: Apartment List

The elevated price growth isn’t likely to cool off anytime soon, Logan Mohtashami, lead analyst at Housing Wire, said. Millennials are set to power unprecedented demand over the next three years throughout the housing market. That shift will drive an even bigger gap between supply and demand, the analyst said.

“We never built enough apartments anyway. And now we have the biggest household-formation demographic group in history,” he told Insider. “Whether they’re not buying homes, they still have to live somewhere. So yeah, rent inflation should pick up.”

Rising rents pose a larger-than-usual risk to broad price growth. Shelter inflation is stickier than inflation in other categories, meaning it’s less likely to immediately cool after leaping higher.

The Federal Reserve, the White House, and most economists expect decade-high inflation to cool off as bottlenecks are addressed. Inflation for used cars, food, and utilities is expected to weaken as supply rebounds. Rent prices, however, complicate the consensus outlook. If shelter inflation continues to boom, forecasts for temporarily faster price growth could fall flat.

To be sure, rent prices are highly seasonal, and prices tend to be highest in the summer, according to Apartment List. If prices follow trends seen in 2018 and 2019, prices would fall modestly through the fall and winter. Such declines could line up with a slowing of broader inflation.

But with rents in major cities expected to keep climbing, shelter inflation is a top gauge to watch for hints at whether price growth fades as expected or stays past its welcome.

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Take a look inside the ‘uninhabitable’ house without a toilet or power that just sold for $3.5 million in Australia, as global property markets boom

A large room with crumbling walls and building materials on the floor.
The property listing says that it is located close to a shopping district and several schools.

  • A Sydney home lacking flooring, a toilet, kitchen, and power sold for $3.5 million, Bloomberg first reported.
  • The property received 30,000 enquiries globally in a wild property market, which stunned the selling agent.
  • The property listing says that “behind its charming façade” it has “uninhabitable interiors.” Take a look inside.
  • See more stories on Insider’s business page.
This “uninhabitable” four bedroom house in a Sydney suburb sold for $3.5 million (4.7 million Australian dollars), despite not having a toilet, kitchen, flooring, or power, selling agent Joe Recep told Bloomberg.

A large house with a brown roof and white awning sits on a slope next to a road.
This property sold for $3.5 million in June despite not having a toilet, kitchen, or power.

The house sold at auction on June 5, according to its listing on Australian property site, where it’s marked as “sold.”

The listing says that “behind its charming character façade” the property is in need of “major work.”

Joe Recep, selling agent at NG Farah Real Estate, told Bloomberg that the property lacked basic amenities like painted walls, a toilet, kitchen, or power. 

The 556.4 square-meter home has four bedrooms and three bathrooms, and is described as a “neglected period home” with “uninhabitable interiors” in its listing.

A large dilapidated room with paint peeling off the walls is lit up by the sun coming through the windows
The 556.4 square-meter property is described as having “uninhabitable interiors” in its listing.

The median price for four-bedroom houses in the Sydney suburb is $2.28 million (3.055 million Australian dollars), according to data from, based on sales within the past 12 months. 

The property received 30,000 enquiries in four weeks from all over the world, including buyers in the United States, United Arab Emirates, and New Zealand, Recep told Bloomberg.

A large room with crumbling walls and building materials on the floor.
The property listing says that it is located close to a shopping district and several schools.

The property listing says that it has off-street parking space for three cars, and is close to a vibrant shopping and restaurant district as well as several schools.

The property’s listing describes it as an “extremely rare opportunity with big potential,” and the new owners can restore it to its “former grandeur.”

The sun streams through stained glass windows into a hallway with several dark wooden doors.
The four bedroom property received 30,000 offers of interest globally, selling agent Joe Recep said.

The listing says that the property sits in the “heart” of Kensington, a Sydney suburb.

Recep told Bloomberg that he’d been in real estate for 25 years and had “seen nothing like” the surge in interest for the dilapidated property.

A house in a state of disrepair sits on a bright green front lawn on a sunny day.
The house has three bathrooms and off-street parking space for up to three cars.

The global housing price average rose 7.3% in the year to March, the fastest surge since 2006, according to the Knight Frank Global House Price Index

Australia’s average house price climbed 8.3% over this time period, Knight Frank’s figured showed. 

The listing says the property is located on a “quiet street framed by a beautiful tree canopy” and has off-street parking space for up to three cars.

A house with a brown roof sits behind a large tree on a sunny day.
The average Australian house price rose 8.3% in the year to March, data from real estate agency Knight Frank showed.

The listing says the property has a “sunny north-facing yard, traditional entry verandah,” and “high embellished ceilings.”

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3 signs that American homebuyers are solving the housing crisis by refusing to pay crazy prices

Millennial homebuyers attend open house
Prospective buyers visit an open house in West Hempstead, New York.

  • After months of surging prices, Americans seem to have had enough with the housing boom.
  • With inventory near record lows and prices climbing at the fastest rate ever, buyers aren’t biting.
  • There are many signals that buyers are cooling the market on their own, by saying no.
  • See more stories on Insider’s business page.

One question is plaguing prospective homebuyers in this red-hot housing market: when will prices start coming down? But the cure for high prices is high prices, to paraphrase a famous saying from the commodities world.

There’s evidence that buyers are providing the cure, staying away from the high prices and cooling the market by collective action – or inaction.

Here are the three signs that American buyers are slowing the housing market’s roll on their own.

(1) Sales down from their peak

The start of the pandemic – and unprecedented easing from the Federal Reserve – sparked the housing boom. Sales of new and previously owned homes still sit well above pre-pandemic levels, but both have slowed from their fall peaks.

The decline is powered, in part, by the massive shortage of homes across the US. With fewer homes to sell, the sales rate can’t remain at elevated levels.

Still, the steady decline suggests the market boom could be normalizing. It also comes as median selling prices for new and existing homes sit at record highs, presenting an affordability problem for buyers just entering the market.

(2) Buyer optimism waning

The wave of demand that powered the housing boom seems to be crashing.

More than half of surveyed Americans referenced high home prices when evaluating the market, according to the University of Michigan’s survey of consumer sentiment. The reading marks the biggest share ever recorded by the survey.

More broadly, 54% of respondents said it was a bad time to buy homes in May. That’s the most pessimistic outlook since 1982.

Anecdotal evidence supports the data. Eighty-two percent of millennials said in May they’re more likely to buy a fixer-upper due to affordability issues, according to a Bank of America survey. The generation is particularly vulnerable to the price melt-up. Millennials are nearing their peak homebuying age and already had their finances dented by the Great Recession. Unless price growth cools, the generation could be forced to cheaper alternatives to homeownership.

(3) Mortgage interest sinks

It’s not all bad for prospective homebuyers, however. Mortgage rates have only just risen from the record lows seen earlier in the year, offsetting some pressures from soaring prices.

Home loan data suggest the trade-off just isn’t appealing enough for buyers. The Mortgage Bankers Association’s Purchase Index – a gauge of mortgage applications for single-family homes – has tumbled nearly 27% from its January peak.

Forecasts suggest the downtrend is part of a larger correction. Mortgage applications surged through the second half of 2020, possibly reflecting a pulling-forward of demand as borrowing costs tumbled. But loan purchases have fallen below their projected trend through much of 2021, Len Kiefer, deputy chief economist at Freddie Mac, said in a Wednesday tweet.

To be sure, housing data is volatile, and recent readings suggest the buying surge will continue. Pending home sales soared 8% in May, according to a Wednesday report, trouncing the estimate for a 1% decline.

The long-term expectation, however, is for a widespread slowdown, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said.

“The surge in pending home sales is a huge outlier,” he said. “We still think sales will fall a bit further over the next few months, pushing up the months’ supply numbers and taking some of the heat from surge in prices.”

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House prices rose in April at the fastest rate on record

Home construction Delaney Park
Homes under construction in the Delaney Park housing development are seen from this drone view in Oakley, Calif., on Thursday, June 24, 2021.

  • Home prices soared 14.6% year-over-year in April as the nationwide supply shortage intensified.
  • The jump is the largest since the S&P CoreLogic Case-Shiller index began tracking data in 1987.
  • Home prices have surged through 2021 as builders struggle to catch up with unprecedented demand.
  • See more stories on Insider’s business page.

Another month, another acceleration in US home inflation.

Home prices throughout the US surged 14.6% from year-ago levels, according to the S&P CoreLogic Case-Shiller home price index. The reading marks a pick-up from the 13.3% rate seen in March and the fastest pace of price growth since data collection began in 1987. Economists surveyed by Bloomberg held a median estimate for a year-over-year jump of 14.7%.

Phoenix posted the largest one-year jump of 22.3%, according to a Tuesday press release. San Diego and Seattle followed close behind, with respective gains of 21.6% and 20.2%. Chicago registered the smallest gain, with home prices climbing 9.9% from April 2020.

Price growth accelerated broadly through April. All 20 cities included in the national index saw price growth land in the top quartile of historical performance. Charlotte, Cleveland, Dallas, Denver, and Seattle all notched their highest 12-month gains in history.

The US housing market has been on an absolute tear through 2021. Record-low mortgage rates and outsize demand drove sales sharply higher early in the pandemic. The buying spree quickly morphed into a price surge as Americans snapped up what little inventory existed before the health crisis. With buyers still clamoring for homes and supply only just rebounding, home inflation has spiked to highs not seen in modern history.

“This demand surge may simply represent an acceleration of purchases that would have occurred anyway over the next several years,” Craig Lazzara, global head of index investment strategy at S&P Dow Jones Indices, said in a statement. “Alternatively, there may have been a secular change in locational preferences, leading to a permanent shift in the demand curve for housing.”

Other indicators signal contractors aren’t likely to balance the market anytime soon. Housing starts rose just 3.6% in May, missing the economist forecast and offsetting just some of the prior month’s 12.1% slide. Building permits – which act as a more forward-looking indicator for residential construction – tumbled 3% to the lowest level since October.

The construction shortfall is likely to keep price growth elevated in the near term. Decades of inadequate homebuilding have left the country with a shortfall of up to 6.8 million units, according to a June report from the National Association of Homebuilders. Contractors would need to reach an annual construction pace of 2 million units to fill the gap in 10 years. But with starts sitting at just an annualized rate of just 1.57 million as of May, price pressures are set to linger well into the economic recovery.

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3 fundamental changes from the pandemic economy that could become permanent

Coronavirus restaurant
A customer pays for his purchase in the doorway of Dave’s New York, a retail store, as phase one of reopening after lockdown begins, during the outbreak of the coronavirus disease (COVID-19) in New York City, New York, U.S., June 8, 2020.

  • Some elements of the pandemic-era economy are likely to stick around well after the recovery.
  • Experts warned the post-crisis economy would be different, and now it’s becoming clear how.
  • From remote work to a red-hot housing market, 4 fundamental shifts could be permanent.
  • See more stories on Insider’s business page.

The post-pandemic economy is taking shape.

Fifteen months after the US first plunged into lockdown, the economy is well on its way to a complete reopening. Spending is up, businesses are rehiring, and Americans are – slowly – returning to work. Economists largely agree that economic output will grow at the fastest rate since the 1980s this year.

Yet experts have warned the recovery will occur in a country that is permanently changed. Americans should brace for “a different economy,” Federal Reserve Chair Jerome Powell said in an April conference hosted by the International Monetary Fund.

Kristalina Georgieva, managing director of the IMF, said the post-pandemic economy could yield improvements if policymakers are prepared for substantial change.

“It doesn’t mean a worse economy if we think well in advance, if we think about educational attainment, if we think about flexibility for people entering the labor market, and if we think about where growth is going to come from,” she added during the conference.

And while the US is far from completing its recovery, some fundamental shifts are increasingly clear. Here are three pandemic-era changes that could turn permanent as the country enters a new normal.

1. Remote work becomes the norm

Remote work coronavirus
A video producer works from his at-home studio to conduct remote interviews with talent on April 19, 2020 in Franklin Square, New York.

Most of the US has reversed restrictions that kept employees from the office, but not all companies are mandating in-person work like they did in February 2020.

As much as 71% of the US workforce telecommuted some or all of the time during the coronavirus crisis, according to an October survey from Pew Research. Of the 5,858 American adults surveyed, 54% said they want to work from home after the pandemic ends. 

Business leaders themselves are embracing remote or hybrid work. The switch to flexible work structures is “a permanent civilizational shift,” venture capitalist and tech entrepreneur Marc Andreessen wrote in a recent blog post, while Facebook CEO Mark Zuckerberg has said he’ll work remotely for at least half of 2022, saying it made him “happier and more productive at work.” Facebook told its 60,000 workers in June they only need to work from offices 50% of the time. It was one of many giant firms to give its workers that kind of permission.

2. A persistently hot housing market


The shift to remote work made housing hot, as Americans drove outsize demand for new and existing homes. The rally intensified further as mortgage rates hit multiple record lows through the end of 2020.

That boom has since run out of steam, but not for insufficient demand; decades of chronic underbuilding left the market with insufficient supply. After months of surging sales, nationwide inventory sank to record lows and prices leaped at their fastest pace since the housing bubble of the mid-2000s.

The market needs as many as 6.8 million new homes to balance out supply over the next decade, the National Association of Realtors said in June. That would require a 27% jump in homebuilding activity, and economists aren’t optimistic builders will rise to the occasion. The lingering gap between home supply and buyer demand will likely keep home prices climbing at an elevated rate for years, the Urban Land Institute said in May. 

3. Service jobs are out of fashion

NYC coronavirus tables restaurant
Empty tables stand at a restaurant in Manhattan on March 01, 2021 in New York City.

Jobless are largely avoiding the service industry amid reopening.

The pandemic exposed a handful of weaknesses throughout the sector. Employees risked exposure to COVID-19 just by showing up to work; wage growth remained stagnant; and conditions in retail and food service jobs worsened as businesses pushed to do more with fewer workers.

Surveys show people are looking for better pay, conditions, or both. Separately, quits soared to a record-high 4 million in April, with most occuring in the retail, food services, and accommodation industries.

Service businesses are catching on. Large-scale employers including Chipotle, McDonald’s, Amazon, and Under Armour all raised their starting wages in recent months as they rush to attract workers. Others are offering perks ranging from signing bonuses to fitness machines. To be sure, this could be a temporary hiccup during a reallocation of the workforce.

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The US housing boom helped wealthy homeowners the most

House for sale US
A house’s real estate for sale sign shows the home as being “Under Contract” in Washington, DC, November 19, 2020.

  • The housing market rally has largely benefitted wealthy homeowners as prices soar at record pace.
  • Sales of homes priced over $1 million are up 245% year-over-year. Homes worth under $100,000 are down 11%.
  • The gap is just one of several K-shaped trends in the uneven economic recovery.
  • See more stories on Insider’s business page.

Like many other aspects of the US recovery, the housing market’s boom has been anything but even.

The market rally started as a broad upswing. After home sales tumbled at the start of the pandemic, surging demand and low mortgage rates spurred a nationwide buying spree. But as the boom charged forward, a K-shaped split emerged in which type of homes were rapidly gaining value and which were being left by the wayside.

The term “K-shaped recovery” has come to exemplify uneven elements of the US’s economic rebound. Wealthier Americans generally fared better through lockdowns as they switched to remote work and leaned on savings. Low-income Americans and minorities, however, have longer recoveries ahead of them after being disproportionately hit by the COVID-19 recession.

Existing home sales data published Tuesday reveals just how wide that gap has become in housing. Sales of homes worth at least $1 million have surged 245% year-over-year, according to the National Association of Realtors. That’s a larger jump than any other price category.

Conversely, sales of homes worth less than $100,000 have plummeted 11% from May 2020 and sales of homes worth between $100,000 and $250,000 dipped 1.7% through the year.

The disparities point to growing inequity in the US housing market. Homes worth up to $250,000 accounted for about 30% of sales in May, while those worth more than $1 million only represented 6.3% of sales.

The sales gap widened even further in the spring. As dire inventory shortage drove home-price inflation to its fastest rate since the mid-2000s market bubble with demand handily outstripping supply, sales for the most expensive homes soared even higher, and sales of homes costing less than $100,000 dropped lower.

Taken together, the country’s wealthiest homeowners benefitted most from the price rally, and those living in the country’s least-expensive homes have largely missed the market upswing.

Other data suggest the trend will continue through the summer. Housing starts have wavered in recent months as expensive lumber costs and lot shortages cut into homebuilding. And sales of new homes slid again in May, suggesting contractors are far from meeting massive demand with new supply.

New homes that have gone to market are also more skewed to wealthier buyers than a year ago. Where the majority of new homes in May 2020 were priced between $200,000 and $299,000, the majority now cost between $300,000 and $399,000, according to the Census Bureau.

The shift has little to do with more expensive units hitting the market, Ali Wolf, chief economist at housing platform Zonda, wrote in a Wednesday tweet. Instead, the change reflects price growth over the last year. Roughly 95% of contractors raised prices from April to May, and most of the increases averaged $10,000 or more, Wolf said.

Addressing the shortage will take a massive effort, according to NAR’s estimates. Decades of underbuilding and losses of existing homes left the US with a supply shortage of about 6.8 million houses, according to a report published earlier this month.

Builders will need to accelerate construction to 2 million units per year should they aim to fill the hole over the next decade, NAR added. That would be a sizeable jump from the May pace of 1.57 million homes per year.

“There is a strong desire for homeownership across this country, but the lack of supply is preventing too many Americans from achieving that dream,” Lawrence Yun, chief economist at NAR, said in the report.

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