While the come back in the housing market is impressive, it is important to realize that the rapid growth is starting from very low levels. Starts peaked at over 2 million in 2005; the 917,000 annual rate for February was still less than half of the bubble level. It is reasonable that starts will continue to increase over the course of the year, as vacancies are falling back to more normal levels. However the vacancy rate still remains at unusually high levels. Furthermore, it is not plausible that starts will go back to their bubble pace.

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For more, check out the latest Housing Market Monitor.

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