Housing construction can't shrink much further

Residential construction has been cut way back. New housing starts are now about as low as they've ever been. This probably isn't the exact bottom, but we must be getting close. Further declines can't do much to damage the economy anyway, since residential construction is now a very small part of total activity. At this low level of new home construction, the excess inventory of homes will definitely decline, thus eventually strengthening the housing market. The excesses of the past are clearly being worked off. The system is fixing itself.