Friday, October 17, 2008

Housing starts have collapsed -- good news

Housing starts have fallen to extremely low levels, and that's good news because it means that the inventory of homes on the market is going to be shrinking rapidly, and that will keep prices from falling to zero as many seem to fear. This charts shows we're at a major historical low in starts, but given that the economy has grown significantly over the decades, the current level of starts is actually much lower (relative to the size of the economy) than it has ever been in the past.

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