Housing costs are rising, both for home prices and rents. Does this mean that new construction is too low, or is this just a financial phenomenon?

Home prices across the country have increased by 6.3 percent in the past year, compared to a long-run average of 4.6 percent. Rents increased by a lesser 3.6 percent, but compare that to overall inflation of just 2.4 percent. Regional differences are large, of course, with pronounced effects from growth limitations in some markets.

Dr. Bill Conerly based on data from Census Bureau

Percentage of housing units vacant, rental and owned.

For supply and demand balance, take a look at the new data on housing vacancies released by the Census Bureau. The accompanying chart shows the trend from 1980, with the most recent data covering the first quarter of 2018.

We seem to be right in the ballpark of normal for both rented and owned housing. (Rental housing includes apartments as well as condos and single-family homes on the rental market. The “owned” category is what we would call owner-occupied, except these are vacancy figures, so it would be owner-unoccupied.)

Some vacancy is normal and healthy. A family moves out of one house into another. It may take a week or a month before the next family moves in. The same is true for apartments, but to an even greater extent.

(The quarterly data are not highly accurate. Bill McBride at Calculated Risk blog has an explanation of the issues, in particular, that the survey behind the quarterly data does not align with the more-accurate decennial census. Nonetheless, the quarterly survey show us the trend on a consistent basis.)

The underlying driver of residential construction is population growth. The usual factors thought to influence housing starts, such as incomes and mortgage rates, can speed up or slow down the construction needed to serve a growing population, and these factors can shift the mix of houses toward the high end or the low end. But in the end, housing is built for people, not for mortgages.