DAVID GREENE, HOST:
Here is a reminder that in an economy, numbers only tell us so much. Right now in the United States, home prices are rising but still relatively affordable, and interest rates are low. So economists are trying to figure out why home sales and home construction are not picking up faster. Here's NPR's Chris Arnold.
CHRIS ARNOLD, BYLINE: When you've owned a few houses, you know there are certain things that you just must have. And for Karen Diamond, that includes a place right outside the door to the kitchen to put the grill for cooking barbecue.
KAREN DIAMOND: We grill 12 months out of the year, so - and after a snowstorm, the first thing we shovel out is the grill.
ARNOLD: Diamond and her husband, Ruben Fernandez, are looking at a new condo in Boston. They've stopped by here with their realtor, Thomas O'Connor.
THOMAS O'CONNOR: A full bath here...
O'CONNOR: And then two smaller bedrooms here.
DIAMOND: With a closet.
ARNOLD: They like this place 'cause it's all on one level. They're both retired, and the house where they live now, it's tall and narrow and full of stairways, which are clearly getting a little harder to navigate.
DIAMOND: I already fell down the steps, carrying a chair down the steps. That's how I did it. But it's - you have to think about these things before you're too old.
ARNOLD: So parts of the housing market right now seem pretty normal. Empty nesters are downsizing, families with kids looking for bigger houses. But there is something missing, something really important.
LINDSEY PIEGZA: The first-time homebuyers.
ARNOLD: Lindsey Piegza is the chief economist with the financial firm, Sterne Agee.
PIEGZA: First-time homebuyers account for about 50 percent of the market share, typically. They now fall into less than 30 percent, a multi-decade low.
ARNOLD: Piegza says that drop in demand is a big reason that home construction is still down around a 50-year low point. That's actually an astounding number if you think about it. Builders are putting up fewer homes today than they were back in 1960, and the U.S. population has about doubled since then. So when will the housing market really get back to normal?
WILLIAM WHEATON: I think there's pretty much agreement that the housing market has not recovered as fast as everybody thought it would.
ARNOLD: Economist William Wheaton is with MIT's Center for Real Estate. He says there are two competing theories right now. One is that there's been some fundamental shift in the housing market and that that's going to mean weaker demand for homeownership.
WHEATON: And the other is it's just a matter of time. Things have just gotten a little choked up, and the market's going to start whiz-banging again very shortly.
ARNOLD: For her part, Lindsay Piegza is in that first group. She's one of the experts that thinks there is a big change afoot, a cultural or preference shift that's at play here with younger Americans.
PIEGZA: A lot of Americans, especially the 20-somethings or 30-somethings, don't view a single family home as the all American Dream. In fact, some of the youngest generations prefer renting for an extended period of time.
ARNOLD: William Wheaton sees a preference shift, too. Younger people are much less likely these days to settle down and get married. But he suspects most eventually will partner up and buy a house or an apartment. So he's in the second group. In fact, for anybody who's ready to stay put for five years or so in most parts of the country...
WHEATON: I would say to somebody who's renting, why aren't you buying?
WHEATON: Yes. You know, you have mortgage rates at three and three-quarter percent and everybody says mortgage rates are going up and prices are going up and if you wait five years, you're going to miss the boat.
ARNOLD: Wheaton also says the decline in home values has stopped some owners from selling because they don't have much equity. But with prices rising, he thinks that will change. The Case-Shiller Home Price Index out this week shows prices are up about four percent nationally from a year ago.
WHEATON: And I think it'll be a little bit like a bottle of champagne. Once everybody's equity is restored and the millennials finally get married, then we're going to see a lot of pent up demand come back into the market.
ARNOLD: But just when the cork pops out of that housing market bottle is hard to say. Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.