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Question about housing construction

  • Thread starter Thread starter superrific
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superrific

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So I'm sure there are at least a few people who can help me figure something out.

Today's economic news was a miss in housing starts, which are down 1% sequentially month over month at 1.25M. Well, that's a pace of 15M new starts this year. There are about 150M housing units in the country, so we are literally adding 10% to the housing stock. Over a decade, this pace would double our housing supply.

I don't understand this math at all. Has housing supply doubled over the past decade? It wouldn't if there was a substantial loss of residential units elsewhere, but is that true? I'm sure there are a few structures removed from housing here or there, but I've never seen a big removal and it seems unlikely to me that many residential units are lost, at least not compared to how many are built.

So, one of these things has to be true:

a. We have roughly doubled our housing stock over the past decade (growth has been inconsistent but generally speaking it's been around 1.2M - 1.5M per month for a decade not counting Covid.

b. Not all housing starts become houses; in fact, there would have to be a fair amount of "quits"

c. We are losing more housing stock per year than I realize, so the additional stock is more replacement than expansion.

Any help?
 
I cannot imagine we are doubling housing stock. Prices would not be able to handle such a large infusion.
 
Paine said:
Is the starts number annualized? It seems to add up if you calculate it with that in mind.
Click to expand...
Yes. Mystery solved. That was quick. Kind of careless on my end not to scrutinize the graphs more closely. I guess I deserve a pass for dumbness on occasion.
 
My understanding is that we need x number of starts to address new home owners as well as attrition of older homes.

During the housing crisis the number of starts was well below the targeted need, once we were out of that and new starts resumed, there were not enough new starts to catch up, then covid reduced the number of new starts again, so we are still well below the number of needed homes on the supply side.

But yes the number is annualized, my understanding is that we need at least 1.25 million a year normally, with our current shortage of supply we would need to exceed that number to bring supply back to where it needs to be.

We once had a thread talking about housing, I find it very interesting, but it fell off the front page.
 
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