1 These declines may have reversed much, or perhaps all, of the earlier overvaluation. Notwithstanding this correction, all indications are that the softness in housing activity is likely to persist for some time. In normal times, population growth and the attendant formation of new households tend to support housing demand.
Indeed, by some estimates, the current stock of housing is not high relative to the number of housing units that would be predicted by long-run trends in household formation. However, the actual number of households has fallen well short of trend household formation.