Is There Enough Housing Production? It Matters Which Indicators Are Used to Answer

McClure and Schwartz argue that there is no US housing shortage for the 2000-2020 period because: (1) we added more dwellings than households; (2) vacancy rates are not low by historical standards; and (3) current headship rates are unrelated to the ratio of recent growth in dwellings to growth in households. I argue that these indicators offer misleading guides for addressing policy-relevant questions related to the supply of housing because household formation is endogenous to changes in the housing stock. I demonstrate the shortcomings of these indicators with a stylized graphic/numerical analysis of short-term and long-term housing market equilibrium and adjustment dynamics in two hypothetical metropolitan areas. Changes in household size (adjusted for demographic and income distributional alterations) and changes in housing rents and prices are more appropriate indicators for making housing policy choices, implying that current concerns over the responsiveness (long-run elasticity) of housing supply are indeed justified.