Dive Brief:

• A study of U.S. housing found that, in the 10 metro areas with the largest percentages of vacant homes that could go on sale, construction activity is about 48& of what would be normal over the past two decades.
• When vacant housing is available as potential competition, builders hold off, as opposed to being at 100% of the historical pace in the 10 metro areas with the lowest vacancy rates.
• Some homes are being held off the market for repairs or because they are being prepared for sale, but there also is the factor of household formation being lower than it used to be, which just adds to the uncertainty about when markets will return to more normal behavior.

Dive Insight:

The driver for the study was an attempt to explain why buyers find a tight market when the national vacancy rate – 10.2% in the third quarter – is closer to the level during the recession than to what it was before that. The conclusion was that the U.S. does not have a tight housing market because of a housing shortage but because of a vacancy shortage within the existing housing stock. That is not encouraging to builders in many areas.