Are There Too Many Houses in America?

A popular conjecture is that too many homes were built during the boom and part of our current economic difficulties are centered around finding new employment for construction workers that are no longer needed. I wanted to take a crack at the really long term data.

It was bit tricky getting what seemed like good recent data on total housing but I have housing starts going back to 1959. I compared that against the increase in population since 1959.

The graph below is the increase in the population since 1959 versus the number of new homes built since 1959.

There is a slight bulge in total homes built relative to the population in the mid 2000s but it looks as if virtually all of that has been undone in the later half. Here is a closer up look at the last two decades

Another way to look at it is the ratio between total population increase and total housing increase.

From the 70s through the late 80s there was an increase of just over 1.5 people per new home. This doesn’t count the number of homes that were bulldozed so the population per home is likely higher.

However, today we are well above that and indeed above the cumulative ratio of the 1990s. This first cut at the data doesn’t suggest that there are too many houses in the United States. Though there are obviously many other factors to consider, such as household composition and the fraction of people living in apartment buildings.