In February 2007, housing starts dropped to their lowest level in 10 years, and the news did not augur well for the future. In October 2007, housing starts dropped to a 14-year low, and signs that the economy was headed into recession became unmistakable.
On Wednesday, the Commerce Department announced that housing starts plunged again in March, by 11.9 percent measured against February, and by an extraordinary 37 percent compared to March 2007. That's the lowest number since March 1991, during the thick of the last bad recession experienced in the United States. Building permits also dropped again, signaling no early signs of a turnaround.
The good news is that the economy needs this medicine. A huge overhang of unsold homes is swamping the market, and until those homes find owners, bringing new inventory to market just makes the patient sicker. The bad news is that optimists looking for evidence that the current downturn will be merely a "mild recession" (to quote David Seiders, chief economist for the National Association of Homebuilders) aren't going to find any in the newest housing numbers.