by Calculated Risk on 9/07/2010 06:17:00 PM

The following graph shows total housing starts and the percent vacant housing units (owner and rental) in the U.S.

Note: this is a combined vacancy rate based on the Census Bureau vacancy rates for owner occupied and rental housing through Q2 2010.

Click on graph for larger image in new window.

The vacancy rate continued to climb even after housing starts fell off a cliff. Initially this was because of a significant number of completions. Then some hidden inventory (like some 2nd homes) probably became available for sale or for rent, and also some households have doubled up because of tough economic times.

It appears the total vacancy rate might have peaked and started to decline. This suggests more households are now being formed than net housing units added to the housing stock. But there is still a long way to go.

I know I'm a broken record - but it is very unlikely that there will be a strong rebound in housing starts with a near record number of vacant housing units.