The U.S. housing market is in a state of chaos, with affordability at an all-time low and mortgage rates at their highest since 2000. Despite these conditions, home prices continue to surge, and houses are selling faster than before the pandemic, indicating a strong demand. The root of the problem lies in the lack of supply, both for sale and for rent.

While construction of new units has reached record levels, the completion of these projects is lagging due to bureaucratic hurdles and a shortage of labor. The shift from single-family homes to apartment units, which take longer to build, has also contributed to the delay.

The Biden administration has attempted to address the issue by offering grants to local governments to remove regulatory barriers to home construction. However, the majority of building restrictions are local and difficult to reverse.

The construction industry is also grappling with a labor shortage, with wages rising but still failing to attract enough workers. The industry is competing with companies like Amazon for workers, and many young Americans perceive construction work as too physically demanding.

Increasing the number of foreign-born workers could be a solution, but the current political climate makes significant immigration reform unlikely. As a result, the housing crisis continues, with costs spiraling out of control and no immediate solution in sight.

Read more at Bloomberg.