Housing Starts Not Keeping Up with Demand Percent Growth of Housing Starts
Although the U.S. now has a healthy economy, incomes are on the rise, and growth in household formations has finally started to normalize, the housing industry cannot keep up.
This is the second factoid in a series of five factoids detailing slow-to-grow housing starts, low inventories, and rising mortgages and rents.
Fewer homes are being built per household than at any time in U.S. history. According to Joint Center for Housing Studies estimates, annual construction should now be on the order of 1.5 million units, or about 260,000 higher than in 2018.
Instead, total housing starts this year are still 31 percent below pre-Great Recession levels – 1,238,000 in 2019 May (seasonally adjusted at annual rate) versus 2006 starts of 1,801,000.
After digging out of the hole left by the recession, housing starts had a 28.2 percent jump in 2012 and 18.5 percent growth in 2013, but the large increases have stalled in recent years before hitting negative growth in the first quarter of 2019.
Housing growth regionally presents a more troubling picture for some areas. The South has the healthiest growth in housing starts, up 6.5 percent this year with all other regions posting negative growth in both single and multi-family unit starts. It should be noted that the South also has the largest increases in household formations contributing to this growth. The Midwest has the largest drop in housing starts this year – down 11.2 percent. Multi-family family unit starts are up 14.3 percent in the South, while the Midwest posts a negative growth of 20.3 percent.
Source: U.S. Census Bureau, U.S. Dept. of Housing and Urban Development, Current Population/Housing/Vacancy Survey * Seasonally adjusted