This morning the Census Bureau reported that Housing Starts increased to 582,000 in June from May's upwardly revised 562,000. Year-over-Year starts are still down (-46.2%).
I'm unable to post graphs at the moment, but Calculated Risk has an excellent one, showing that housing starts are a leading indicator, always borttoming before the end of recessions. Note the recent strong turn-up in our current recession looks like the harbingers of recovery from past recessions.
CR concludes, "It now appears that single family starts might have bottomed in January. However I expect starts to remain at fairly low levels for some time as the excess inventory is worked off." Personally, I would like to see housing starts increase past 600,000 on a seasonally adjusted basis, and (because of strong seasonality) to see improvement in the YoY% decline to (-40%) or less, before I would feel reasonably confident that the bottom in new housing starts has actually been made.
Back in February I noted that new housing sales almost had to make a bottom this year (or else by trend there would be 0 new house starts by early 2010!) Why is a bottom in housing starts crucial? As I said then,
A bottom in housing volume (regardless of prices) is important. I have pointed out in a number of previous posts how real private residential investment turning up -- or at least declines much slower than overall GDP -- is one of the earliest signs of an end to a recession and the beginning of economic expansion. We could see that (relative) upward turn in residential investment as early as later this year.
Much to Gloomsters' dismay, this is yet another sign that economic recovery (in the sense of +GDP growth) may be imminent.