The U.S.-Mexico-Canada Agreement passed by the House of Representatives will help to ease the nation’s housing shortage by stabilizing the prices of materials used in construction, according to the National Association of Home Builders.
The new trade pact was approved on Dec. 19 with a 385 to 41 bipartisan vote. This was after the three nations agreed to revisions House Speaker Nancy Pelosi said would protect American workers and the environment. The trade pact is now pending in the Senate. The U.S. is Canada’s biggest export market for softwood lumber, primarily used for home construction.
“The U.S. residential construction and remodeling industries rely on tens of billions of dollars in building materials sourced from Mexico and Canada annually because America cannot produce enough steel, aluminum and other materials and equipment to meet the needs of the domestic housing industry,” NAHB said in a statement.
The U.S. housing market is struggling with an inventory shortage that has depressed sales. The so-called “months supply” number that measures how long it would take to sell off the existing stock of homes fell to 3.7 in November, according to the National Association of Realtors. Most economists consider a six-month supply to be a balanced market.
U.S. existing-home sales fell 1.7% in November, according to NAR, even with mortgage rates near three-year lows. While some of the supply shortage can be blamed on factors like Baby Boomers aging in place, it’s also due to depressed levels of home building, said NAR Chief Economist Lawrence Yun said.
Homebuilders still haven’t recovered from the housing bust a decade ago, Yun said in an interview. There probably will be 888,000 single-family housing starts in 2019, which isn’t enough to keep pace with population expansion, he said.
The drop in home sales is “clearly due to inventory shortage at the lowest price point,” Yun said. “Some of the trade-up buyers, who often are buying new homes and releasing that entry-level existing home inventory to the market, aren’t making a move.”