Take a look at this graphic from Bill McBride at Calculated Risk illustrating total and one-unit housing starts since 1968. It’s pretty startling.
Also, see this chart of housing starts per 100,000 since 1900.
Maybe this is one of those &glass half empty, glass half full kind of things. I suppose you could look at it as housing construction has nowhere to go but up.
I think, on the contrary, that it illustrates the shape of the new normal. I don’t know whether the reasons for that are demographic, the end of the bubble that started in 2001 (or, arguably, earlier), other reasons, or some combination. But when you haven’t seen anything like it for two generations, as is the present case with housing, you’ve got to admit that something basic has changed.
Karl Smith, looking at multi-family housing starts, sees the glass a half-full:
The “hopeful” argument is that while the absolute increase is much smaller this time around the pace is actually a bit faster, a four-fold increase rather than a 3-fold increase.
However, given the current conditions in housing I was looking for an even stronger snap back. This alone will not be enough to push the economy into a boom. We need a series step-up in the rate of growth.