I appeared on CNBC today for an interview on housing.  News on the housing front are getting worse, not better. Housing starts were up 3% but building permits, a much more important leading indicator of future housing starts, were down a whopping 6.6%. So, starts will fall more in the next few months and the modest recovery in October is pure noise after over a year of falling starts.
 

Also, note that all of the increase in starts was driven by a sharp increase in condo starts (multifamily home building) that were up an incredible 40%, a rise that will certainly reverse next month; instead single family starts were down another ugly 7.3%. I still expect starts to fall another 20% plus  in the year to come and to bottom well below 1 million units in 2008, most likely at 900K (or 25% below current levels). One month of rising starts - all driven by condos - does not make a trend.
 

And all other indicators of housing and mortgages - NAHB confidence level at historical low, home prices falling at an accelerated rate, home sales still plunging, home builders sales and earnings in free fall, a rising number of bankrupt homebuilders and mortgage lenders, suppliers of home builders being hurt by late payments and defaults, mortgage delinquencies, defaults and foreclosures sharply rising, employment falling in housing and all sort of housing related financial services, financial losses even among Fannie and Freddie, rising delinquencies in near prime and prime mortgages, ABX index at historic low even for AAA and AA tranches, a meltdown in the RMBS and CDOs issuance market – are signaling a worsening housing recession that will be worse than any in US history.
 

Losses due to subprime alone will be as high as $400 to $500 billion and this does not count losses due to near prime, prime mortgages, auto loans, credit cards, commercial real estate, leveraged loans, loans to the corporate system; if add it all up losses could end up – in a US recession – as being as high as  $1,000 billion or $1 trillion. The financial bloodbath thus has only started and a hard landing of the economy is clearly ahead of us.