Jan. 21 (UPI) -- Realtor.com said Tuesday the building of new U.S. homes has fallen nearly 4 million homes short of demand.
Realtor.com analysts found that 5.9 million single family homes were built from 2012-2019, which wasn't enough to offset 9.8 million new households formed during that time.
Its economists estimated that even if construction moved fast, it would take four to five years to get back on track.
"Simply put, new home starts are not keeping pace with demand," said Realtor.com Director of Economic Research Javier Vivas. "The current inventory crisis and the need for 3.8 million new homes means a nearly insatiable appetite from potential buyers, especially in the lower end of the market."
The inventory shortage can be traced back to the housing crash more than a decade ago. Loans were made available to the riskiest buyers and builders put up 1.7 million single-family homes at the peak of the construction boom in 2005, according to the U.S. Census, but after the 2008 financial crisis, home construction plummeted.
Home builders focused on higher end homes with bigger margins, Realtor.com said in a release, making entry-level and mid-range homes the main inventory gap.
Baby boomers are also deciding to hold onto their homes more than previous generations did at their age as many millennials moved back home with their parents unable to rent or buy their own space during the recession.
"Large populations of renters and well-qualified potential buyers with strong incomes are waiting in the wings," Vivas said. "Assuming the economy avoids a full-on recession and rates remain low, the window for builders remains wide open. If builders can deliver homes at adequate price points, absorption will continue to strengthen through the first half of the decade."