Single-family home sales fell dramatically from almost 7 million at the peak in 2005, to 4 million in 2010. Since the trough, sales have risen to 4.9 million in 2013. Assuming the late 1990s and early 2000s exhibited a more normal market balance, a typical level of home sales is 5.6 million per year made up of 900,000 new-home sales and 4.7 million existing home sales. That means we are short at least 700,000 annual sales.

Three factors make this an extremely conservative estimate. First, as much as one-quarter of the 2012 and 2013 existing home sales were to investors, and that trend is declining. Owner-occupant buyers will have to offset the investor demand. Second, as the number of households grows, the same rate of turnover will mean higher absolute numbers. Third, the recession and slow recovery have produced as much as 4 million home owners that would have sold and purchased but didn’t because of market and employment uncertainties, low equity, and other relatively temporary conditions. That pent-up demand will increase the number of sales for at least the next few years.


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