Traditional heartland dominance of the U.S. economy, described by Myrdal's 'process of circular and cumulative causation', has been reversed within the past decade. Sparked by shifts in job location, and structured by housing market dynamics, dominant migration streams are from core to periphery, from large cities to small, from higher to lower density areas, and from metropolitan to non-metropolitan regions. These reversals are restructuring the nation's settlement patterns. This paper examines the role of U.S. housing policy in promoting new low-density residential construction far in excess of household growth, thereby accelerating neighbourhood filtering and the abandonment of housing constructed in earlier decades, and facilitating locational adjustments to the growth reversals. Within this context, the forces promoting revitalization of certain inner neighbourhoods in certain metropolitan regions are evaluated: local 'tightness' of housing supply; life-style shifts in the 'baby boom' generation; and a particular coincidence of neighbourhood externalities such as high-quality older housing, public-good amenities, and abundant facilities and services. It is concluded that each of these forces is subject to limits that will severely constrain the extent of inner city revitalization, however, unless other more potent contributing causes appear.