FORTUNE – For all the good news we’ve heard about the U.S. housing market, some things still haven’t changed. Builders are breaking ground on more new homes than we’ve seen in years, but buyers aren’t exactly clamoring for them.
For the past year, housing starts have risen by 37%. However, home sales haven’t kept up, rising only 9% during the same period, according to a report by Capital Economics released Monday. In December, housing starts rose at the fastest pace since the summer of 2008. But at an annualized 954,000, that was far more than the 369,000 new homes sold during the same period.
The gap doesn’t suggest that builders are overbuilding, like they did in those regrettable years when the market boomed on easy credit. They are overwhelmingly building for renters, not buyers. Which suggests that a healthy housing market may not necessarily call for more home sales, at least nowhere nearly as many as during the boom years.
Shares of the biggest U.S. builders including Lennar Homes (LEN) and Toll Brothers (TOL) have soared during the past year, but investors appear more excited about renters than a return of homeowners. To date, construction of multi-family units destined for the rental market rose by 150% over the two years ending in the third quarter of 2012. That’s by far higher than the 50% rise of newly constructed multi-family homes for sale, and a 30% increase of single-family starts also for sale, according to Capital Economics.
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The tendency to rent versus buy is clear when we look at the homeownership rate, which has stayed flat as borrowers lost homes to foreclosures and tighter lending standards stalled sales. During the last three months of 2012, the homeownership rate fell slightly to 66% from 66.3% the previous quarter, according to the U.S. Census Bureau’s latest report. That’s considerably lower than the 69.2% when homeownership peaked amid the housing market boom in June 2004.
To be sure, individual buyers have started playing a bigger role in the housing recovery. Mortgage applications for home purchases have risen for the past five months as interest rates have stayed ultra low. What’s more, the rate of homeownership has edged up from its post-peak low of 65.9% during the second quarter of 2012.
Ownership is unlikely to return to its peak, at least not any time soon. That’s not necessarily a bad thing, given that easy credit is what helped drive the nation into financial disarray in the first place.
And so the renters that are helping the market heal are certainly welcome.