Housing starts have been essentially flat for about two years, and have plumbed the lowest level of residential construction activity relative to GDP (slightly over 2%) ever recorded.
If construction activity were to decline further, it most likely would have happened by now—no construction company CEO by now could possibly have ignored all the signs of distress and overbuilding and excess housing inventories. Even if activity were to decline further, it would have a de minimis impact on the overall economy.
Conclusion: for all practical purposes, housing can only get better, since it can’t get much worse. When will the improvement come? It doesn’t really matter, since even a 10 or 20% jump in housing starts would have a minimal impact on the economy. Housing will likely turn up well after everything else has turned up, and most things have been turning up for almost a year and a half. Housing is going to be bringing up the rear this time around, for the first time ever.
This is a very different business cycle, because it was the only one that was precipitated by a housing crash following a housing boom of epic proportions.
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