WASHINGTON, Dec. 5 (Xinhua) -- U.S. Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, said on Wednesday that inadequate housing supply in the United States posed a major challenge for the functionality of national housing market.
"We estimate that over the next decade, young adults will add about 20 million households - and those households will need a place to live," said Sam Khater, chief economist at Freddie Mac.
Freddie Mac said that housing stock in the United States was well short of the level that the market needed. It also warned that if supply continues to fall short of demand, home prices and rents are likely to outpace income.
"Until construction ramps up, housing costs will likely continue rising above income, constricting household formation and preventing homeownership for millions of potential households," said Khater.
Freddie Mac estimated that housing market in the United States needed 1.62 million units every year. However, the current annual rate of construction is about 370,000 units.
Specifically, Freddie Mac said that the demanded units mentioned above required 1.1 million units to accommodate household growth, 300,000 units to replace depreciated existing stock, 100,000 to meet the demand for second homes, and 120,000 units to maintain an efficient market.
Khater also mentioned the major factors that would impact household formation, including housing costs, income, employment, education, marriage and children, race, and geography.
"Of these factors, we have identified housing costs to be the biggest impediment to household formation, followed by labor market outcomes," added Khater.
Speaking of housing cost, affordability problem had just become a new challenge for American homebuyers.
According to a report released by the National Association of Home Builders in November, the percentage of houses that are affordable for median income families in the United States dropped to a 10-year low at about 56.4 percent in the third quarter of 2018.