Housing Starts up 9.1% in June

According to the the U.S. Census Bureau News Press Release from July 17th, housing starts were up 9.1% over May. In the July 18th issue of the Gartman Letter L.C., Dennis Gartman provides a correlation between housing starts and past recessions. An excerpt has been provided below.


"Looking at the data, we note that U.S. housing starts rose a shocking 9.1% in June compared to May, for an annualised starts figure of 1.09 million. Historically, recessions in U.S. housing end when annualised starts dip below 1.0 million and then turn higher. Indeed the consistency with which this happens from recession to recession is really quite extraordinary. From the 70's onward, each "official" recession ended shortly after housing starts began to turn up swiftly from their previous plunge...always after having fallen below the psychologically important 1.0 million figure. Looking back at those recessions, we note that starts fell to approximately 0.8 million in early '75, almost coextensive with the huge recession that had begun in late '73. In the short, but nonetheless very serious recession of '80, starts fell to about .85 million before turning higher and during the recession of '80-'82, starts fell towards .75 million but then turned higher...swiftly. Jumping forward to the recession of '90-'91, housing starts fell to .75 million and turned higher..which brings us to where we stand this morning. Having risen to 1.75 million annual home starts back in mid -'05, and having risen relentlessly from the last recession-bounded low noted just above, "starts" broke their uptrend line and have been falling ever since...until these past two months. Does that mean the worst of the housing market is behind us? Yes, that is what it means."

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