Tuesday, June 16, 2009

Starts at Home: May 2009

Are we at the bottom for housing starts?

Possibly. This graph shows the starts verses population expressed as annual rates (so, 307M people times 1.73 starts per 1,000 equals 531k starts). The numbers are at record lows and well below trend. But there are a lot of factors, such as household formation rates, amount and location of available inventory, and credit availability that I haven't looked at, so I can't really say for sure. But the bottom has to be close, barring another big leg down in the overall economy. However, even if it is close, that doesn't mean the rebound will be robust. Increases are likely to come at a slower rate than after the last bottom in December 1990.

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