When you read the stories today about home construction hitting its lowest level since 1959, you probably think it's just more bad news -- but it's actually good news.

The only way we're going to even get near the bottom of the housing price drop is for the backlog of available homes to be sold. We'll only see prices start to climb back up when demand is higher than the available supply. We're still a long way off from that scenario, but if builders stop building, we'll get there a lot faster.

Based on the new numbers released today by the Commerce Department, the pace of new construction will put the U.S. on track to build the fewest new homes and apartments since the end of World War II. Commerce reported that construction of new homes and apartments dropped to 791,000 on an annual basis. Prior to today's report the slowest pace since World War II was in January 1991. This was the fourth straight monthly drop and I doubt it's the last one. There are still too many homes waiting to be sold.

The declines were led by a 31% drop in the Northeast and 13.7% drop in the Midwest. There were modest increases in the South (1.5%) and the West (7.5%). Given that the South and the West were the hardest hit at the beginning of the housing bubble burst, this could be good news that these hard hit areas are nearing their bottom.

U.S. housing starts decreased 6.3% in September -- the U.S. Commerce Department announced Friday, as builders attempted to reduce supply amid the nation's worst housing slump in more than a generation. (pdf)

Housing starts fell to an 817,000 annual rate in September, the U.S. Commerce Department announced. It was the lowest housing start pace in 17 years. (pdf)

Economists surveyed by Bloomberg News had expected housing starts to total an 880,000 annualized rate in September. Housing starts for August were revised lower to 872,000 from 895,000.

Over the past four months, housing starts have averaged a 932,000 annual pace, down from 973,000 for the four months ending in August.

Further, single family home starts fell 12% to a 544,000 annualized rate in September, their lowest level in 16 years.

Also, building permits declined 8.3% in September to a 786,000 annualized rate -- a 27-year low.

In addition, housing starts are down 31.1% in the past year, single-family starts are down 42%.

Picture this: a U.S. neighborhood where no homes are being constructed, for miles.

In the current economic climate, the above could be a snapshot in any region of the country (or, sadly, in every region of the country).

U.S. housing starts fell to a seasonally-adjusted annual rate of 965,000 in July, the U.S. Commerce Department announced Tuesday (pdf). It was the lowest level for housing starts in 17 years.

Economists surveyed by Bloomberg News had expected July U.S. housing starts to total 950,000.

Further, housing starts have declined 29.6% in the past 12 months. Economist Glen Langan told BloggingStocks Tuesday he knows why.

"It doesn't take a Harvard mathematician to deduce this one. Builders are competing for sales with the large supply of foreclosed homes, as well as with home owners in good standing with banks, who are trying to sell their homes," Langan said. "So the great U.S. homebuilder pullback continues."

The U.S. economy is growing at a minuscule rate or is already in recession. Job growth, save a few sectors, is non-existent. Bank mortgage qualifying requirements are at their most rigorous levels in a decade. Investors / readers ask, 'where are the buyers going to come from to spark a rebound in the housing sector?'

New home sales in the U.S. fell 2.5% to a seasonally adjusted, annualized pace of 512,000 in May, with sales in the Western U.S. plunging to a 26-year low, the U.S. Commerce Department announced Wednesday (pdf).

Economists surveyed by Bloomberg News had expected May new home sales to register a 515,000 annualized rate.

Sales are still down about 40% compared to a year ago. In 2007, 776,000 new homes were sold, compared to 1.05 million in 2006.

Meanwhile, inventories rose to a 10.9-month supply in May at the current sales pace, compared to a 10.6-month supply in April. A typical, healthy housing market has a three to four month supply of homes for sale.

Sales fell in three regions: 11.6% in the West, 7.9% in the Northeast, and 5.1% in the Midwest. Sales rose a scant 0.4% in the South. Further, the West's 114,000 annualized sales pace was that region's slowest sales pace in 26 years.

The U.S. housing sector has registered another ignominious statistic. Home prices in a 20-city sample plunged 14.4% in March 2008 (PDF), on a year-over-year basis, according to the S&P / Case-Shiller U.S. National Home Price survey released Tuesday. Meanwhile, prices in a 10-city survey plummeted 15.3%.

It was the largest decline in the survey's 20-year history, Case-Shiller said.

Economists surveyed by Bloomberg News had expected home prices in the Case-Shiller 20-city survey to decline 14.2% in March 2008 on a year-over-year basis.

The areas with the largest percentage declines were: Las Vegas, -25.9%; Miami, -24.6%, and Phoenix, -23.0%. Only one city in the survey -- Charlotte, N.C. -- appreciated, with prices there rising just a scant 0.8%.

Percentage price changes in other major U.S. cities were as follows: New York, -7.4%, Los Angeles, -21.7%, Chicago, -10.0%, Boston, -5.9%, San Francisco, -20.2%, Washington, D.C., -14.7%, Miami, -24.6%, and Seattle, -4.4%.

Economic Analysis: Another horrible U.S. housing sector statistic, and the sector remains in deep recession. Economists differ regarding whether the U.S. housing sector has bottomed: some see a housing recovery as early as Q4 2008, while others say it won't start until mid-2009. In either event, it's going to be a while before new home builders can resume typical building schedules and get out there and make some money -- a fact that suggests U.S. home prices are likely to continue to decline for at least the next two quarters, and probably longer.

U.S. housing starts plunged in March as builders continued to cut back construction in the face of the nation's worst housing slump in more than a decade.

Housing starts totaled a 947,000 annual rate, the U.S. Commerce Department announced Wednesday (pdf) - - the lowest annualized rate since March 1991. The February housing start statistic was revised to a 1.075-million-unit annual rate.

Economists surveyed by Bloomberg News had expected housing starts to total a 1.02 million annualized rate.

Meanwhile, building permits, a measure of future construction, fell to a 927,000 annualized rate in March from 984,000 in February.

Single-family home permits dropped 5.7% to a 680,000 pace. Construction of multifamily homes, which includes townhouses and apartment buildings, plummeted 25% to an annual rate of 247,000 in March 2008.

Economist Glen Langan told BloggingStocks Wednesday many potential homebuyers are doing what you'd expect them to do in a sluggish housing sector, and builders are responding accordingly. "Potential home buyers are simply delaying their home purchase, if they aren't putting it off entirely, until the market stabilizes," Langan said. "And builders are following that signal. They're cutting back construction in the face of these large home inventories."

Langan added that he expects the nation's supply of unsold homes, currently about a 9.5- to 10-month supply at present sales rates, to increase to about an 11-month supply by the summer 2008, before inventories start to work-off. A healthy home sale market typically has a 3-4 month supply of homes on the market.

Sales of new homes fell 2.8% to a seasonally-adjusted annual rate of 588,000 in January 2008, the U.S. Commerce Department announced Wednesday (pdf). Economists surveyed by Bloomberg had expected a seasonally adjusted rate of 600,000.

Meanwhile, the December 2007 seasonally-adjusted total was revised to 605,000.

The median sales price of new houses sold in January 2008 fell 4.3% to $216,000; the average sales price rose 0.7% to $276,600.

In addition, the seasonally-adjusted estimate of new houses for sale at the end of January 2008 was 482,000 -- representing a 9.9-month supply at current the current sales rate.

Economist Steve Affinito told BloggingStocks Wednesday the January 2008 new home sales data is in-line with earlier data on existing home sales, indicating that the housing slump is far from over.

The number of mortgage delinquencies rose to a 20-year high in Q3 as borrowers increasingly found it difficult to make payments within the 30-day grace period, the Mortgage Bankers Association announced Thursday.

The percent of home loans with payments more than 30 days late rose to seasonally-adjusted 5.59%, the MBA announced -- the highest level since 1986. The group's survey began in 1972.

Telling stat

The delinquency statistic suggests that the housing correction "is far from over," according to economist Steve Affinito.

"It's not even the beginning of the end," Affinito told BloggingStocks on Thursday. "Generally during a housing slump, what you see first is a rise in unsold homes, and then a rise in delinquencies, mostly from homeowners who did not sell or could not refinance."

I just received notice from my Wells Fargo Bank (NYSE: WFC) granting their final approval, and if we can settle a couple remaining estate issues the deal is done. I am about to embark upon one of the greatest challenges of my life to date. My lovely wife and I are going to buy that challenge of a home left behind by my father-in-law. I, the man of a million options, intend to restore that house from the ground up. With the exceptions of the roof, a majority of the exterior wall space, and pretty much the entire foundation, that home needs complete replacement. It's a sturdy little shack, well worn and embraced with a self-made northwoods history. It sits on an acre of land and it has good potential, but boy is it ugly. At least we'll be doing our part to fight the sluggish real estate scene.

We'll be paying about $16,000 for it. That's for the acre of land, about 1,700 square feet of living space (not including attic and basement) and several out buildings which are all in good condition. We're asking the bank for about $60,000 to purchase the home and to return it to clean modern condition. When all the work is done the home should be worth between $70,000 and $80,000. That estimate doesn't include if I add any porches or decks or even expand out a room or two. I figure it will take about three years and about 70 trips to Home Depot (NYSE: HD).

I have the ability, the expertise and the Sears (NASDAQ: SHLD) Craftsman tools to pull off the job, but time will be a major problem. I guess I'll be sleeping five hours a night instead of six. Alas, a cowboy's work is never done. Professionals will be needed to install a new furnace, rough-in the plumbing, upgrade the electrical panel, and drill a new well. Most of the other work will be falling to myself and my dear wife. I hope she knows what she's in for!

Putting the first quarter behind us, as many wish we would, gives us pause to look ahead in hopes of finding the gems of success that wait for us. Here are some of my areas of interest as dictated by gut instinct. Please, before you groan and wretch and move on to the next post, remember that in defiance of one major writer's claim that no one warned you of the bear(ish) market that passed by this way ... I did.

I had also suggested steering clear of big pharma quite some time ago. You may take note that all but a few of them have, at least temporarily, splattered on the wall. The clear exception I see at this time is Pfizer Inc. (NYSE: PFE), which I consider to be in turn-around mode. I'll even be so bold as to hint that you may want to watch it for some acquisition movement of some kind. Pfizer has a sharp, well-run operation with some fine projects on the table. I like Pfizer and have no reason to change my attitude towards it.

Here are some of my watch words for at least the next two quarters:

• Watch natural fibers including cotton, glass derivations, carbon, and cellulose. Apply liberal amounts of nano-technologies and your world vastly increases in breadth and scope.
• Pay attention to water in all it's forms and applications. You shall benefit if you move it ,use it ,split it, spend it, clean it, or own it.
• Continue to avoid bonds unless your slopping around with bundles of loose cash that you have nothing better to do with.
• Scrap metals remain solid and steady. Beware of mining, at least temporarily.
• Watch for increased use of wood as raw material in things other than home construction. In cost of materials, the dynamics are changing. Stay on top of what the manufacturing sector is hinting towards.
• Look hard at the building and maintenance of diesel engines. I'm receiving reports that biodiesel is having some negative impact on the current trucking fleet. Adaptations in materials and design will be needed soon to accommodate the changes in fuel make up. Be there and be ready.

That's what I have to offer you for right now. At this time I need to make one small apology. I hope those fine people who hold shares in General Electric (NYSE: GE) haven't lost faith in me yet. I promised you $40 per share and I still believe it's coming. Hold tight my friends, nothing good ever comes easy.