Why New Home Construction Is Slow, And Will Remain So For A Long Time

Summary: September housing starts were weak, as they have been since the crash. Their failure to recover has been a surprising and large drag on this economic cycle. Demographic change and slow GDP prevent a housing recovery. On the other hand, housing busts create recessions; this slow expansion (without a boom) is more sustainable — and might run unusually long.

Slow growth of housing

September housing starts were weak, -15% YoY NSA (year-over-year, not seasonally adjusted) and -9.0% MoM SA. The weakness in this key industry is one facet of secular stagnation. How weak is it, compared to past expansions? See this graph of annual housing starts per 1000 people. After 7 years of economic expansion, starts run at less than half of the previous peak (Jan 2006), and two-thirds of the average during the previous two expansions. They rose to the 1963-2007 lows – and stalled.

Annual housing starts per 1000 people

See the rest of the article at Seeking Alpha!

Advertisements

Leave a comment & share your thoughts...

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s