It seems like everyone is upset the new home starts is at all time low. It averaged at around 2.1 Million / year in 2005 and this February it was at 1 M / year. Instead of crying over the fortune of few home builders, we all should be happy. The reason being is that number of US households is only increasing by 1.2 M / year. Since very few homes are being demolished and obsoleted every year all these new homes result in additional capacity. Ignoring obsolescence, in 2005 there were 1M extra homes built then anyone needed. 2006 averaged 1.7 M built and 2007 averaged 1.3 M. For these 3 years is about 1.5 M of overproduction. (And with such extreme overproduction comes housing collapse).
Of course, I would much prefer the builders cut back production by another 50% but there are way too many "greedy" builders for this to happen. So at this rate it will take a few years to work through the inventory. But at least with supply being less then demand, inventories will start coming down.
Why do you care?
If you want to buy a cheap house - now is probably the best time to do it.
If you are worried about your wealth loss because of so much of your money is tide up in the house - then probably you can start seeing the light at the end of the tunnel.
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