New US home construction is 31% down from a year ago to a 14-year low. Building permit applications are 26% down from a year ago to a 12-year low. Merrill Lynch is taking a $5.5 billion writedown on subprime loan losses. Inventories of unsold homes are at record levels, leading to strong downward pricing pressure.
In math, a top or bottom may only occur when the first derivative – a function that describes the slope of the curve – is zero. These numbers support us just having had a first derivative of zero in house prices over time.
Someday the first derivative will again be zero, when the house prices begin to rise.
But don’t hold your breath: To quote analyst Mark Zandi of economy.com, “The housing market is choking on unsold inventory that continues to rise as home sales plunge and foreclosures surge.” Maybe it’s time for America to do a little remodeling.