While the nation’s for-sale housing market continues to improve, don’t lose sight of just how much runway is left in the recovery before the existing home market is restored to equilibrium, and how that dynamic is serving to catalyze new home construction.

At the rate homes are sold, there were only about two months’ worth of inventory on the market in January, about half the five-year average, according to the George Mason University Center for Regional Analysis, which has paved the way for a rebound in prices. But the scarcity of existing homes for sale is largely the result of house prices that are still depressed, despite the recent gains.

According to data from Zillow, the average home in the Washington region is still nearly 25 percent off of its peak value, a level that is actually a bit worse than the U.S. average of 19 percent. An estimated 315,000 homeowners still owe more on their homes than they’re worth, and their so-called negative equity averages a whopping 42 percent.

Owners who remain upside down, but current, on their mortgage today will be unlikely to sell. Selling a home for less than the outstanding mortgage balance requires the owner to write a big check at the closing table or take a credit hit from a short sale. Thanks to a monstrous run-up in pricing during the housing bubble, when median home prices increased nearly 2.5 times from 2000 to the peak in 2005, it will take nearly nine years for pricing to reach levels that will get owners who are currently under water back into positive equity territory.

Since the supply of existing homes for sale is expected to remain tight until home values increase for more of these marginalized owners, some home builders see an opportunity to step up construction to satisfy the appetite of prospective buyers, and new homes are springing up at a quicker pace.

Over the past six months, single family permitting activity is up by 50 percent in comparison to the depressed levels during the same period a year ago. The biggest jump has been in the District and Montgomery County, where the number of single family permits issued has doubled. In fact, the number of single family homes permitted over the past six months is up substantially in nearly all jurisdictions in the region.

With confidence in the housing market improving, and likely years more to go before underwater home owners can come up for air, new house construction activity could help fill the void to appease buyers hungry for a home.

Erica Champion is a senior real estate economist with CoStar Group in Washington.