Housing starts have historically indicated a strong real estate market, which indicates a strong economy. As you see from the FRED graph, the 2008 crash brought the US to almost 1/6th of the US’s peak in housing starts. We are still recovering in 2017, but gradually. January 2017 housing starts exceeded forecasts, and analysts are expecting a 3% growth in February 2017.
It is unlikely that the US will experience a development boom like one from the 70’s or 80’s. Increased government regulation along with more cautious investment capital will make any serious development speedup unlikely. Since 2015, America has been tiptoeing around 1.2 million new units a year after steady growth from 2010-2015.
Economic policy (low rates) is probably helping the gradual growth, but the #1 cause of growth is the labor market. Job growth leads to housing start growth. Some are speculating that recent changes in the political environment may have a positive effect on housing starts due to new jobs along with jobs coming back to America. Also, if the Federal Reserve increases interest rates, like they have been planning on doing, it is likely going to negatively affect development.
Another interesting feature of the graph is the lack of any serious drop after the 2000 Dot-com bubble popped. That recession barely had an effect on the housing market while the 2008 subprime mortgage crisis is still affecting real estate growth nine years later. It could be that America is stagnating and will experience a similar European style economic slowdown. Hopefully not, though.
Graph posted by the Prof
Note that within FRED you can Edit a graph; one of the options is to add a series so that you can (as I did) divide the first one by it using the formula field (eg, a/b).