How Many New Homes are “Considered” Healthy?

Sometimes, I find myself getting my Dean Baker on. Not that I’m that smart, you understand: I clearly am not. But busting the language used by the media is occasionally fun.

Take for example the following NPR news article about the falling housing market which includes this curiously unqualified statement:

Housing Starts Dive; Food Boosts Wholesale Prices : NPR.

The building pace is far below the 1.2 million units a year that economists consider to be healthy.

Considered by whom, I wonder? By the Commerce Department? If so, why not say that? And what is the normal pace of new home building, per capita, over the history of the United States? Since WWII? Is that what “healthy” means, or is there some other criteria not discussed in the article?

The thing is: we went through ten years of a constantly-climbing housing market which was the result of entirely fictitious loan approvals aimed at supporting a financial investment shell game of monumental, world-wide scope and scale. Every year, we were told that this was a sign of a “healthy” economy. I am not an economist, but may I respectfully submit that perhaps its time that we used another benchmark?