Since 1968, single-unit housing start have never dropped below 750,000 without being followed by a recession. The number for May was 674,000, which is yet more evidence that we’re likely in a recession.
The good news, however–as this excellent chart from Calculated Risk shows–is that unless this housing slump is much worse than those in the 1970s, 1980s, and early 1990s, we’re getting close to the bottom. In most recessions, single-unit starts bottomed between 500,000 and 700,000. In the worst recession, 1981-1982, starts bottomed around 500,000. In each recession, moreover, the recovery in housing starts preceded the broader economic recovery, and in each case was sharp.
Given the extent to which housing prices soared this time around, it would not be surprising if the current downturn proves the worst on record. But even if it is, we still should be getting close to the bottom.
Graph courtesy of Calculated Risk
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