It's simple. There is just too much supply in the housing market. Until the supply clears building new homes will remain low.
And the pace is getting worse. The Commerce Department reported Wednesday that builders started work at a seasonally adjusted annual rate of 529,000 new homes and apartments last month. That's a drop of 4.3 percent from November and the slowest pace since October 2009.
In a healthy economy, builders start about one million units a year. They built twice as many in 2005, at the height of the housing boom. Since then the market has been in decline.
One positive sign is that builders appear to be planning more projects in 2011. Building permits, considered a good barometer for future activity, rose 16.7 percent in December to a seasonally adjusted annaul rate of 635,000, the best pace since March. But builders likely pulled more permits in California, New York and Pennsylvania ahead of code changes in 2011 -- a factor that likely influenced the spike.