Between the birth rate and immigration, legal and illegal, the U.S. should be adding about 1.2 to 1.5 million households annually. In 2007, we added half that number. What does household growth mean to housing?

Household growth is a good indicator of the economy. When money's tight, people tend to double up. More grown children fail to launch and stay put in their parents' basements, more renters sign new leases, fewer first-time homebuyers come to the table, which stifles move-up buyers, and the final result is that homebuying stagnates.

In December, there was a 9.6-month supply of homes on hand. That's about three months too long to be a healthy market, and low household formation is going to make things worse for housing, particularly for existing home sales.

Why? "New households primarily purchase existing homes," says spokesperson for the National Association of Realtors Walt Molony.

That said -- how many more existing homes do we need on the market to sell? The answer is -- with the current oversupply -- about zero. That's bad news for homeowners who want to put their homes on the market this spring. They're heading right into a saturated market.

And the news isn't much better for new homes. Builders are also sitting on a 9.6-month supply of homes as of December. New homes account for about 15 percent of transactions, so based on that rate, builders really only need to build about 100,000 new units this year. New homes appeal primarily to trade-up buyers. The new home market is dependent on existing home sellers who want to trade up for most of its customer base.

One ray of hope is that lower interest rates have stimulated mortgage application volume three percent above the previous week, says the Mortgage Bankers Association's weekly application survey.

Purchase applications rose by 12 percent, while refinancings fell one percent. Any gain in applications is positive, and applications are likely to go higher on the news that FHA and Fannie Mae and Freddie Mac loan limits have been temporarily raised.

Watch Realty Times' Interest Rate Update daily to see the trends in the mortgage market.

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Published: February 13, 2008

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.