The latest issue of Nation's Building News hit my e-mail yesterday, and it carries a tantalizing lead story that puts real numbers on the level of pent-up demand for new single-family homes in markets across the country. The gist of it is, while there was massive overbuilding in the single-family sector from 2003 to 2005, the surplus supply turned to deficits by 2007, and depressed housing production since then has resulted in cumulative underbuilding that will grow to 3.28 million units by the end of this year.

Just as surely as we saw the price bubbles portend doom in 2005 in markets such as Florida, California, Nevada, and Arizona, it's now clear as day to me that this massive pent-up demand for new single-family homes (intensified by the expanding gap in quality between new and used homes) has to lead eventually to a home-building bonanza. And there are signs the market is beginning to stir. September construction starts on single-family homes rose 4.4 percent, led by a 4.8 percent growth rate in the South. Single-family sales were up 6.6 percent in September. Retail sales were up 1.2 percent in October, to $373.1 billion, the highest level since August of 2008. Even though consumers still remain reticent to spring for big-ticket items, the retail sector seems to be poised for better holiday sales than the past couple of years. The nation's apartment market strengthened in the third quarter, with national vacancies seeing one of the sharpest declines ever recorded. "Recovery in the apartment rental sector appears to be firmly rooted," Victor Calanog, director of research for Reis, a New York-based research firm, told The Wall Street Journal recently, "... Households appear to be returning in droves to the rental market."

Couple that with the obvious intent of the Federal Reserve to drive the inflation rate up from the current rate of barely 1 percent. The Fed wants to shape business and household expectations so they buy and invest more. Their thinking is that if people expect the price of cars, washing machines (and houses) to go up, they will be more likely to spend now. "The Fed wants to bring purchases forward in time to increase demand today," Marvin Goodfriend, a former economist for the Richmond Federal Reserve Bank, said recently. Sounds like a good idea to me, one that can only help the housing industry.

Now, if we can just figure out where we'll get the financing to develop land and build homes when people really start buying houses again, we'll be in business!