There’s two issues here; demographics and new housing supply, and available inventory of existing homes. There is probably a big overlap but when you hear that the availability of affordable homes is low it is about home prices. Likewise when you here about months supply. When you look at demographics and the the rate at which the supply of new homes is keeping up, that poses a different kind of question. The overlap is when supply of existing homes is so low, it puts pressure on new builds to keep up with the extra pace. That is where I believe we are at the moment. The solution probably lies somewhere between the two; increase in new builds, but encouraging existing home inventory for sale. I believe the stranglehold for both has been the very distorted housing market in recent years that acts as a disincentive to many sellers, which impacts the move up market, and timing issues for developers who plan around long time frames not wishing to get caught out by boom bust cycles. There are very likely many other issues that impact this supply issue. For example, low interest rates inter alia have been stimulating demand. Had that not been the case you might find supply and demand more in equilibrium.
