Ever since the economy solidified in mid-2009 (when the recession officially ended), I’ve been pointing out that the U.S. economy would continue to face a huge headwind from housing.
New construction is typically a driver of economic recoveries, but the combination of tighter credit because of the financial crisis and the massive overhang of existing homes — we built too many plus saw many others become distressed — could not be countered by any conventional, or politically acceptable, policy moves.
We could have done a few things differently to speed the process along and to help more homeowners refinance, but at the end of the day we were always faced with a long bottoming process.
This year, new home construction is likely to add to GDP since it will be better than last year, but it will likely still be one of the worst years of the post-WW II era.
The AJC has a really good piece today about all this, especially as it impacts Atlanta: Jobs up, but not the housing market
From that piece:
Without housing as part of the recovery so far, the job market’s improvement has been slower than normal. In the past two years, metro Atlanta’s economy has added 68,208 jobs. That’s only 2.9 percent growth, compared to 5.4 percent growth in the two years after the recession of 1990-91.
The job rebound is real, 
but it’s not robust. So housing demand is not getting the boost it needs to match the still-swollen supply of homes for sale.
The lack-of-demand story has several facets.
Much of the previous demand for housing came from immigrants drawn to work in the booming economy — or to build houses. That flow to Atlanta has dried up.
Moreover, the anemic job market doesn’t draw young Americans from elsewhere the way it did.
And then, of course, there are many young people — and some not so young — living with parents because they don’t have the income or job security to live on their own.
And while household formation is key, there is one more handicap on demand, said Immergluck: Credit.
I’ll note that while Atlanta has added those jobs, in a fairly solid reversal of fortune, the rest of the state taken together has essentially added none.
The piece is well worth a read.