Why Are There Fewer Homes Being Built?

Although the housing market appears to be constructing, selling, and buying at unprecedented rates, there are less homes being built now compared to previous decades. Business Insider reports that although housing starts grew by 22.6% from June to July this year, there is no comparison to the previous number of housing starts. Privately-owned housing starts peaked during January 2006 with 2.3 million homes in the works. Currently, there are only 1.5 million new housing starts. But what is the exact reason for this? Read more to find out.

Housing construction rates during the 1990s and 2000s were consistently higher than rates since the Great Recession. New housing construction was higher than the latest July figure of 1.5 million for the majority of the months between September 1997 to the end of 2006.

 
The bubble of rising housing prices during the mid-aughts contributed to this increase in new homes being built at such high rates. The Center for Economic and Policy Research predicted that after the housing bubble burst, there would be a drop in construction similar to the recession in the early '80s. Since then, housing starts have not been able to climb back up to such high levels.

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