by Calculated Risk on 3/17/2009 09:21:00 PM

Note: I've added a "ShareThis" button to the posts, and I'm now on Twitter.

In my previous post I discussed the question: Housing Starts: Is this the bottom?

We don't know the answer yet.

But some readers are confusing a bottom in housing starts with a bottom in pricing. It doesn't works that way!

There will be two distinct bottoms for housing:

1) First single-family housing starts and new home sales will bottom.

and then followed some time later ...

2) Prices for existing homes will bottom.

Just about every housing bust follows this pattern. The bottom in prices could be a year, or two, or more away. It is way too early to try to call the bottom in prices. House prices will almost certainly fall all year and probably next year too. Prices will continue to fall. Prices are not at the bottom.

Sorry for repeating myself.

Also, it is theoretically possible that single-family housing starts (off 80% from peak) and new home sales (off 78% from peak) could go to zero - but unlikely. Sometime this year housing starts and new home sales will probably bottom, but that doesn't indicate a bottom for house prices.