In most recent economic recoveries, residential construction has led the general economic recovery. Home purchases are very sensitive to interest rates, which tend to be their lowest at the end of a recession. Consequently, interest sensitive purchases, such as homes and automobiles, are the first to rebound at the start of a recovery.
This time around we seem to be witnessing an anomaly. As seen in the chart below, housing starts, both total and single-family, remain around their 30-year lows. This recent housing crisis has clearly been significant enough that even low interest rates (average 30-year conventional mortgage below 5%) cannot spur new construction. Housing will not make any real contribution to the economic recovery until supply and demand equilibrium is back at a level that stimulates new homebuilding. When that will happen remains the big question.