Skip to main content


Members of D.A. Davidson & Co.

Housing Boom but No Bubble

"Housing prices have soared in the past year.  The national Case-Shiller index is up 11.2% in the past twelve months, the largest gain since 2005-06.  The FHFA index is up 12.0% in the past twelve months, the largest on record (going back to 1991). 


Given these gains, some are wondering whether housing is back in a 2000s-type bubble.  But a deep dive into the data suggests we are not. 


...The primary problem is a lack of homes.  Based on population growth and scrappage (voluntary knockdowns, fires, floods, hurricanes, tornadoes...etc.), we would normally expect housing starts of 1.5 million per year.  But in the past twenty years (March 2001 through February 2021), builders have only started 1.256 million per year.  Builders haven't started more than 1.5 million homes in a calendar year since 2006. 


No wonder the inventory of homes for sale is so low!  Single-family existing home inventories are at rock bottom levels, with only 870,000 for sale in February.  To put this in perspective, the lowest inventory for any February on record from 1982 through 2016 was 1.55 million.  Meanwhile, there are only 40,000 completed new homes for sale, versus 77,000 a year ago and an average of 87,000 in the past twenty years."


(Housing Boom to Continue dated 04/12/2021 by Brian S. Wesbury, Chief Economist, and Robert Stein, CFA & Deputy Chief Economist, with First Trust Advisors LP)


Full article can be read here: