More than five years after the crash, homebuilding is stuck at half its normal level. That's a big drag on the economy. And things aren't looking much better: A report out Thursday shows homebuilder confidence is at its lowest level in a year.
This severe slump in single-family home construction has now been going on across the country for more than 5 years. We haven't seen anything close to that kind of a long-term construction slump since World War II.
"This is a completely unprecedented collapse," says Ian Shepherdson, chief U.S. economist at Pantheon Macroeconomics. "What we learned was that if you pump enough leverage into a housing market, and then take it out very quickly you can see collapses the likes of which you've never even imagined," he says.
Homebuilding remains a kind of sleeping giant. If it wakes up, it could create a lot of good-paying constructions jobs and manufacturing jobs at companies making everything from windows to dishwashers to lawn mowers. When housing really recovers it can offer a real boost to the economy.
And last spring, it seemed like that boost was coming. "Things seemed to be coming back and we were seeing a big pickup in house prices and construction was picking up as well. Everyone got very excited," Shepherdson says.
But then mortgage rates went up. "And at that point things came very quickly to a jibbering halt," Shepherdson says.