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On today\\u2019s show we\\u2019re taking a look at what\\u2019s happening in the housing market and make sense out of some pretty confusing data. Last week we reported that lumber prices have increased to record levels, driven by outdoor construction projects at restaurants, the low inventory in homes for sale, and numerous home improvement projects are driving demand for building materials.

On a recent project that I\\u2019m building, I\\u2019m receiving quotes of 5-6 weeks delivery for wood siding that normally should be a two week delivery item.

Construction trades for large projects in my market are booked for the next 18 months. We just had a builder in Utah decline a very attractive land purchase that had been previously committed. When that happens, it\\u2019s usually because they\\u2019re worried about making a financial commitment to building houses. In this case, they declined because they\\u2019re so busy with existing construction jobs that they don\\u2019t have the capacity to even start those jobs in the foreseeable future.

The headlines read that housing sales volumes for existing houses jumped 20.7% in the past month.

Driving sales are apartment renters seeking more space, young families moving to the suburbs, and wealthy city dwellers looking for second homes, brokers and economists say. At the same time, the supply of houses for sale remains low, with the pandemic making potential sellers cautious about letting people tour their homes. The demand for houses is there.

To put this in perspective, home sales are still down 11% compared with this time last year, which was a slow year by many measures. So arguably the market has the ability to support a higher level of activity without being considered overheated.

Home sales had been in a two-year rut heading into 2020, weighed down by perennially tight supply and historically high home prices. Even solid U.S. economic growth and low unemployment couldn\\u2019t get sales moving back in 2019. That seems like a lifetime ago.

Homes typically go under contract a month or two before the sale closes, so the June sales data largely reflect purchase decisions made in April or May when we were still in a stricter lockdown environment.

Some agents and brokers I\\u2019ve spoken with are optimistic that the usual spring demand has been pushed to the summer, and that momentum is building. The spring is normally the busiest season for home sales, as buyers with children want to move into new homes before the school year starts.

My take it that the market is being constrained on the supply side. People are not moving in the same numbers that we\\u2019ve seen in historical years. That\\u2019s reduced the supply of houses coming on the market. We often see this happen when prices rise. People want to move but don\\u2019t because they can\\u2019t find anywhere to move to. They bought their house a decade ago at a good price, maybe $150,000 or $200,000. Their home has increased in value and now would command a sale price of, say $500,000. But the seller is still living in a house that they paid $200,000 for. If they buy something new, they\\u2019re looking at prices starting at $500,000. Yes, they have a lot more equity to work with. But they often don\\u2019t see the purpose behind getting a larger mortgage and buying a house with a larger price tag. They\\u2019ll move because they\\u2019re forced to move for employment or a life event, but not for a change of scenery.

I\\u2019m currently in negotiation with a home owner whose name is Andy for a property that\\u2019s on the edge of a larger development site. Andy and his wife bought their house for $350,000. Prices in the neighborhood have skyrocketed to more than $1.2M. They don't want to pay that much for a new house.  So they\\u2019re deciding not to sell and stay where they are. That\\u2019s another house that will not go on the market this year.