{"id":50622,"date":"2026-05-21T23:19:57","date_gmt":"2026-05-21T20:19:57","guid":{"rendered":"https:\/\/mk.gen.tr\/why-housing-construction-cant-grow-at-current-demand-levels\/"},"modified":"2026-05-21T23:19:57","modified_gmt":"2026-05-21T20:19:57","slug":"why-housing-construction-cant-grow-at-current-demand-levels","status":"publish","type":"post","link":"https:\/\/mk.gen.tr\/en\/why-housing-construction-cant-grow-at-current-demand-levels\/","title":{"rendered":"Why housing construction can\u2019t grow at current demand levels"},"content":{"rendered":"

The U.S. has too much supply of single-family homes and not enough demand. But why can\u2019t housing starts grow when the White House<\/strong> says we are 10 million homes short<\/a>?<\/p>\n

I go back to the 1984 movie \u201cGhostbusters\u201d and this quote from from Dan Aykroyd\u2019s character: \u201cPersonally, I liked the university. They gave us money and facilities; we didn\u2019t have to produce anything! You\u2019ve never been out of college! You don\u2019t know what it\u2019s like out there! I\u2019ve WORKED in the private sector. They expect results<\/em>.\u201d<\/p>\n

Why am I talking about this? Because people still believe, as they did in the past decade, that if we build a massive supply of homes first, home sales<\/a> will explode. Now, while some in government and non-business people on the internet think this way, the private sector doesn\u2019t, because it runs businesses to make money. Also, the cost to build multifamily housing needs to make sense relative to rents and the cost of capital \u2014 otherwise, you\u2019re a terrible businessperson and you\u2019ll be out of business. As I often say about this subject \u2026

The builders aren\u2019t the March of Dimes!<\/strong><\/p>\n

Today\u2019s housing starts story is the same as it has been for years; we aren\u2019t going anywhere with housing construction. Back in June 2021<\/a>, I wrote an article saying that this would be the case once mortgage rates<\/a> rose and that people shouldn\u2019t get too excited about a housing construction boom.\u00a0<\/p>\n

Today, I will focus on the single-family sector, as it\u2019s the biggest variable in total housing starts data for decades, according to U.S. Census Bureau<\/strong> data<\/a>. <\/p>\n

Housing starts<\/h2>\n

Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1.465 million. This is 2.8% (\u00b111%) below the revised March estimate<\/a> of 1.507 million but 4.6% (\u00b113.9 percent) above the April 2025 rate of 1.4 million. Single-family housing starts in April were at a rate of 930,000; this is 9% (\u00b17.5%) below the revised March figure of 1.022 million.<\/p>\n

What\u2019s happening here is that builders have too many completed units left unsold as new home sales haven\u2019t gone anywhere for years.<\/p>\n

Now, new home sales<\/a> are still at elevated levels compared to 2019, prior to the pandemic. They\u2019re not crashing by any means, but they\u2019re not really growing. Back in December 2024<\/a>, I wrote that builders have a supply problem, meaning their completed units for sale had reached 120,000, which is too much for them to get confident about building many more homes.<\/p>\n

Currently, the number of completed housing units for sale is 121,000. Below is a historical look at where this has been each year, in January, going back decades, to give you an idea of why I\u2019m not a big construction growth guy at the moment.<\/p>\n

Below is the new home sales data. As you can see, it hasn\u2019t gone anywhere for years either \u2014 not really crashing, not really growing, basically stuck in neutral since 2019. If you take away the post-COVID bump and the low point in 2022, a very steady channel of sales emerges.<\/p>\n

In the chart above, you can see why housing starts look the same \u2014 no real big dive in starts but no growth either. For sure, it\u2019s off the peak rate of the post-COVID recovery cycle.<\/p>\n

Below is the builders\u2019 confidence data. The tilt toward smaller builders explains why this survey is still stuck near the COVID-era lows point. Smaller builders don\u2019t have the profit margins of the publicly traded homebuilders<\/a>. A reminder that mortgage rates have risen to yearly highs<\/a> this week, so the increase in the previous report is a bit old and irrelevant to the current rate story.<\/p>\n

With all I said above, you can see why the single-family construction data is showing no growth at all. Here\u2019s a series of single-family construction data lines, and they don\u2019t scream housing construction boom to me.<\/p>\n

Conclusion<\/h2>\n

Not much is happening in housing construction, AI data construction is booming, and the remodeling business is holding up OK, but housing starts really haven\u2019t gone anywhere because there is too much supply and not enough demand. And that, my friends, is how the private sector works. <\/p>\n

On top of all the news above, the conflict in Iran has taken all rate cuts out of the discussion in 2026, and we are talking about hikes now. Sarah Wheeler and I talked about mortgage rates<\/a> this morning, and hopefully the information here gives you a clear picture on why housing starts aren\u2019t growing \u2014 and aren\u2019t expected to \u2014 in 2026.<\/p>","protected":false},"excerpt":{"rendered":"

The U.S. has too much supply of single-family homes and not enough demand. But why can\u2019t housing starts grow when the White House says we are 10 million homes short? I go back to the 1984 movie \u201cGhostbusters\u201d and this quote from from Dan Aykroyd\u2019s character: \u201cPersonally, I liked the university. They gave us money…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/mk.gen.tr\/en\/wp-json\/wp\/v2\/posts\/50622"}],"collection":[{"href":"https:\/\/mk.gen.tr\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mk.gen.tr\/en\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mk.gen.tr\/en\/wp-json\/wp\/v2\/comments?post=50622"}],"version-history":[{"count":0,"href":"https:\/\/mk.gen.tr\/en\/wp-json\/wp\/v2\/posts\/50622\/revisions"}],"wp:attachment":[{"href":"https:\/\/mk.gen.tr\/en\/wp-json\/wp\/v2\/media?parent=50622"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mk.gen.tr\/en\/wp-json\/wp\/v2\/categories?post=50622"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mk.gen.tr\/en\/wp-json\/wp\/v2\/tags?post=50622"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}