Single Family Housing Starts

I have studied housing start statistics since my tenure working for the National Association of Home Builders (NAHB) in the late 70’s. The great recession is by far the worst economic environment to predict when a housing recovery will occur. For this blog post, I will focus on the supply of homes. A later blog post will focus on the demand side. In October, 2010, I posted a blog entry on housing starts and predicted that the first half of 2012 is when there will be dramatic changes in housing production and demand.

David Crowe, NAHB Chief Economist, defines a normal housing market by having 1,500,000 NEW homes built each year. He is predicting this to happen by the end of 2012.

Mark Zandi, Chief Economist for moody analytics defines a normal housing market by having 1,600,000 NEW homes built each year. He predicts this to happen by the end of 2013.

In any event and not being an expert, I can even conclude that new home construction has been in a depression since 2008. The lack of production has caused a supply problem. Short sales, foreclosures, and distressed sales are displacing families still in the need for housing. These homes do not add to the overall housing stock.


The trend of increased housing starts has started!
There will be a dramatic increase in housing starts because of the lack of supply AND pent-up demand.
The result will be increased housing production on the back of labor and material shortages. The workforce in housing has been decimated and material manufacturing plants have either reduced production or closed down.

The result will be increased prices and higher interest rates. Act rather than react.