Data from the National Association of Realtors show the United States needs to build 1.3 million to 1.7 million housing units annually to keep pace with yearly household formations averaging 1 million to 1.4 million, in addition to replacing the 300,000 obsolete dwellings that are razed each year.
Statistics published earlier this year by Freddie Mac, however, show that only 910,000 units were started in 2008 and 550,000 in 2009.
Freddie Mac had projected housing starts at 700,000, but the Commerce Department reported last week that the current annualized rate was well below that, at 575,000.
Housing economist Patrick Newport of IHS Global Insight in Lexington, Mass., believes that, in normal economic times, the number would be closer to 1.5 million.
"The key for housing going forward is employment growth," he said, because "new jobs will require new homes to be built nearby."
When job growth takes off, he said, the rate of household formation will pick up again. It has been extraordinarily low because the economic downturn has led to reduced immigration and doubling up of households - grown children moving back in with their parents, for example.
Increases in household formation will, then, reduce the housing glut, which will then stimulate new construction, Newport said.
If all this holds, housing starts will reach 604,000 this year (still below Freddie Mac's earlier projection), 783,000 in 2011, and 1.21 million in 2012, Newport projects.
But that still would be well below the level the Realtors' group says is necessary.
In fact, Denk and Emrath say, 2010 is "likely to add to the growing deficit of single-family homes by another one million units."
The "foreclosure overhang" is putting a lid on housing starts, said Joel L. Naroff of Naroff Economic Advisors in Holland, Bucks County.
