According to the latest government release, U.S. housing starts were an incredibly low 791,000 units in October 2008. This was a decline of 65% versus the peak level in January 2006 of 2.273 million units. On a year-to-date basis, total starts were -30.6% versus January through October 2007, comprised of singles at -39.4% and multiples at +0.4%. While multiples are performing relatively better than singles, they have been on a gradual downward path since the start of this year.

Northeast, Midwest South and West still Underperforming
The four primary geographic regions, set out in the accompanying graphs, are all exhibiting considerable weakness in starts. The Northeast had a couple of big months in the summer, as projects were brought forward in advance of building code changes in New York. However, in the last month or so, starts have tailed off dramatically. Also, more job cuts in the financial services sector is likely to keep housing activity depressed.

Starts in the Midwest appear to have stabilized at a low level. But further weakness may lie ahead if there are additional layoffs in the automotive sector. The Detroit Three carmakers have been pitching Washington on a bailout package and it remains to be seen whether they will be successful and at what cost. Aid will be tied to more restructuring.

Starts in the South have been very gently sloping upwards over the last three months, but it is still too early to know if this is a trend. Starts in the West may, or may not, be continuing to ease on down, since the latest month did see a slight upward jog.

Sales of Singles are Down nearly 70%
Even more remarkable than the decline in starts in this downturn has been the drop in sales. New single-family homes sold have plunged by nearly 70% from 1.389 million units in July 2005 to only 433,000 in the latest month, October 2008.

The number of unsold houses is coming back into line with a well-served market, but since the sales rate is so low, the number-of-months excess inventory remains close to a year, at 11.1 months. This number needs to begin trending down before any significant improvement will come in terms of new residential construction activity.

The Change in Existing Home Sales Prices is a Scary -17%
As for existing home sales, it's the decline in prices that is getting all the attention. According to Case-Shiller's 20-city composite index for major cities in the United States, existing home sales prices were -17% in September 2008 versus September 2007. Moreover, the year-over-year change is still trending down. That's at the national level. What's happening in specific cities?

Six cities are exhibiting extreme price declines: Phoenix (-31.9%); Las Vegas (-31.3%); San Francisco (-29.5%); Miami (-28.4%); Los Angeles (-27.6%); and San Diego (-26.3%). At the opposite end of the spectrum, four cities are holding up rather well: Dallas (-2.7%); Charlotte (-3.5%); Denver (-5.4%); and Boston (-5.7%). It is also interesting that two of the nation's largest cities, New York (-7.3%) and Chicago (-10.1%), have not yet been totally sucked down into the vortex of falling home prices.

Some Comfort from Home Values
It should also be pointed out that home prices, while in decline, have still retained value better than share prices to this point in the downturn. Stocks come in a much greater variety of quality and can be traded according to a wide-ranging configuration of units. By way of contrast, a home purchase is bulky, but it does provide a service, accommodation. There is comfort to be derived from home ownership that retains some value, even at the worst of times.