If the desired pace is around 4%, the years following the recessionary dip of 2001were not spectacular in terms of growth. In fact, the pace of the economy was dismal. NOTE: the second estimate for 3rd QT GDP was lowered to 2.0% and at the end of this month, the GDP growth rate will be released.
The following graph illustrates the single family housing starts. As you know, in my little world, I think that AS Housing Goes..... SO Goes the Economy. As the economy was below the desired pace, single family housing starts continued to increase from 2001and starts were well above the number of starts needed to satisfy the "normal" housing market.
The single family housing starts took a nose dive in 2006. Two years before the recession officially started. The NAHB forecast in 2012 will be pushed back to 2013 or 2014. Then, the gloves come off. You will see dramatic price increases and the market will immediately turn into a sellers market. WHY?
Pent-up demand and a shortage of housing!!!!!!!!!!!!!!!
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