The Four Horsemen of the Apocalypse
The "Four Horsemen of the Apocalypse" with respect to the current recession in the United States are falling home prices, depressed auto sales, stock market indices that were cut in half at their worst and horrific employment losses. It was the housing market that first showed the signs of distress, beginning in 2006 and continuing up to the present.

It is reasonable to conclude that an improvement in U.S. housing market indicators will be a necessary first step for the economy to get back on track. A number of key reports were released either just prior to the Christmas break or during the holidays. At this point in time, it is a matter of monitoring the numbers to see if any improvement is evident yet. Sadly, it must be reported that there is still very little in the way of good news in housing.

Based on November's results, the housing sector is continuing to deteriorate. Total starts in the month fell to an unbelievably low 625,000 units. That's a decline of 72.5% versus the annualized peak level of 2.273 million in January 2006. The progression of starts has been steadily downward over the past three years. Full-year 2007 was down by about one-quarter versus 2006 and 2008 is going to be down by about one-third versus 2007.

Regional Markets
Nor is any region really doing any better than any other region. Average year-to-date starts in the Midwest, South and West are all down by more than 30% versus the same period of time last year. The Northeast has suffered a year-to-date decline of only 14% but that has been due to the exceptional circumstance of building code changes in New York this past summer that brought projects forward. Since then, the monthly step down in starts has been very steep. November 2008's level, at only 51,000 units, was 60% below what was achieved in November 2007.

Multiples faring better than Singles
Multiple-unit starts were doing okay during the first half of this year, but they have been faltering in the second half. The individual month of November year-over-year decline in multiple-unit starts (-49.3%) was just about the same as for single-family starts (-46.0%). Nevertheless, multiples in full-year 2008 will be down only about 5% to 10% versus full-year 2007, whereas singles will fall by about 40%.

No Improvement in Unsold Inventory Levels
Nor has the inventory level of unsold new single-family residences improved much over the latest month. It still stretches out by nearly a year (11.5 months), based on current sales rates. The number of unsold units has fallen to a reasonable level, but this is being undone by a sales rate that continues to slide. This is where the other numbers on the economy come in. For individuals and families that have seen their savings swept aside in the stock market debacle and their ongoing employment prospects becoming much riskier, a new home purchase is often out of the question.

Home Prices
A key indicator of the state of the housing market is existing home sales prices. Case-Shiller's latest (October 2008) 10-city composite index is now down by 19.1% year over year and its 20-city figure is off by 18.0%. There is not one city with an increase. Six cities are registering year-over-year declines in excess of 25% − Phoenix (-32.7%), Las Vegas (-31.7%), San Francisco (-31.0%), Miami (-29.0%), Los Angeles (-27.9%) and San Diego (-26.7%). Note that all three of California's largest cities are in this listing.

To be balanced, some consideration must also be given to city residential markets that are performing relatively better. For example, there are also six cities where the year-over-year decline in house prices has been less than 10% − Dallas (-3.0%), Charlotte (-4.4%), Denver (-5.2%), Boston (-6.0%), Cleveland (-6.2%) and New York (-7.5%).