For the second time in four months housing starts set a new record low according to the Census Bureau.
Housing starts dropped -12.8% month over month to a seasonally adjusted rate of 458,000. Additionally, housing starts are down -54.2% year over year and are now at the slowest pace on record going back to 1959.
Now, in an effort to make full disclosure, single family or 1-unit housing starts were up 2.8% from the previous month but they are still trolling along a historic bottom and are down -45.6% year over year.
This data continues to suggest that while the new home market has fallen off a cliff and is showing no sign of a recovery, what remains uncertain is to whether or not we have landed on a ledge. In other words, with most economists predicting unemployment to continue to rise throughout 2010 and possibly 2011, and with the Fed playing chicken with inflation and interest rates, the housing market is still facing significant headwinds over the next couple of years.
And while guys like Jim Cramer and Larry Kudlow will contend that slow housing starts are a good thing because it is keeping housing inventory limited, what a lot of people overlook is that the new home market only represents about 8% of the aggregate housing inventory when compared to existing homes. New homes are not the problem, foreclosures are, and those numbers are accelerating.