Housing starts peaked at 2.207 million four years ago, dropped to 0.523 million so far this year and are forecast to rise to 0.7-0.9 million in various forecasts by the end of 2010. Reed Construction Data’s forecast is just short of 0.8 million which is a 40% plus annual growth pace every quarter next year. This would still leave home construction 2/3’s below the 2006 peak level. Beyond 2010, further recovery will be sluggish for three reasons: we have too many houses, today’s apparent cheap credit is an illusion and will disappear anyway in 2011 and the current surge of government issued subprime mortgages will collapse just as the private ones did several years ago.

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