Current construction rate could stabilize housing inventory

At the current construction rate, analysts from Barclays Capital claim the nation's housing supply could return to a healthy state, HousingWire reports.

At the current construction rate, analysts from Barclays Capital claim the nation's housing supply could return to a healthy state, HousingWire reports.

In the years following the housing market collapse in 2007, real estate data shows that household formations fell to between 300,000 and 500,000 per year. Prior to this development, the rate of formation was historically closer to an average of 1.25 million every year.

"We think this will be achievable only if household formation exceeds net construction for a sustained period," said Barclays. "Programs like the FHFA’s REO rental program can help on the margin in certain areas but will not have a big enough sustained impact."

In the meantime, the analysts say a lack of available credit for both prospective homebuyers and builders is a key dilemma holding back a more widespread industry recovery.

Meanwhile, Barclays noted that home prices are expected to fall between 3 to 4 percent by the end of the first quarter, but should be outweighed by an overall appreciation in home values by the end of 2012.



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