(Corrects spelling of company name in May 19 headline to Weyerhaeuser instead of Weyerhaueser)
* CEO says U.S. currently underbuilding houses
* Sees Japan recovery as business opportunity
NEW YORK, May 19 (Reuters) - The United States needs to build more homes to keep up with long-term population growth trends, the chief executive of homebuilder and forest products maker Weyerhaeuser Co (WY.N) said on Thursday.
Demand for the company's timber, houses and logs has dropped sharply in the past three years due to an anemic housing market.
The market for new houses is being squeezed by competition from an abundance of previously owned homes for sale and a deluge of foreclosed properties. Builders, hurt by the weak market, are holding back on new home construction.
While there are fewer houses being built in the United States, the population is still growing and Americans continue to relocate.
The United States needs to build 16 million to 18 million housing units per decade, roughly 1.6 million to 1.8 million homes per year, CEO Dan Fulton said at Weyerhaeuser's analyst day in New York.
In 2010, construction began on just 586,900 new homes, according to the U.S. Department of Housing and Urban Development.
"We are underbuilding today, just as we overbuilt in 2005 and 2006," Fulton said. "I come back to long-term trend levels."
Fulton was quick to acknowledge that other factors, including unemployment and the glut of foreclosed homes, are affecting new construction.
"Just because we're underbuilding today doesn't mean we should go right out and start building them," Fulton told Reuters.
He added that he believes the housing market will recover in the future, presenting a strong business opportunity for Weyerhaeuser.
The rebuilding of Japan after the March 11 earthquake and tsunami should also boost sales, Fulton said.
Weyerhaeuser already has a large export business to Japan. That network should help as the country rebuilds, Fulton said.
Shares of Weyerhaeuser fell 0.9 percent to $22.00 in afternoon trading. (Reporting by Ernest Scheyder, editing by Gerald E. McCormick)