Earlier this month, former Fed Chairman Alan Greenspan dispensed some widely reported optimism by opining that “the worst is behind us” in the housing correction of late. The forecast may yet prove accurate, but the skeptics are snickering a little louder today after reading this morning’s update on housing starts for October.
New construction of privately owned housing units fell sharply last month, the Census Bureau reported. So-called housing starts dropped 14.6% in October from the previous month, measured on an annualized, seasonally adjusted basis. That’s the biggest single-monthly percentage loss since May 2005.
On an absolute basis, the trend doesn’t look any better, as the chart below illustrates. The annualized rate of 1.486 million new starts last month is the lowest in more than six years. If there’s a bottom coming in housing starts, it’s not obvious at the moment. Free fall might be a more accurate term.

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The great economist Milton Friedman died yesterday. But like all great thinkers, he left an intellectual legacy that will endure.
Friedman’s métier was documenting and espousing the libertarian cause in economics and, by extension politics. Free markets and democracy are inextricably linked, he taught. One can’t long survive without the other, an empirical observation that’s still far from universally accepted in the 21st century.
Unlike some in the dismal science, Friedman was no ideologue, even if he was easily caricatured as such by those who don’t understand the academic foundation sustaining his views. Indeed, Milton didn’t preach utopian visions in the hope that the empirical record would lend support. Rather, Friedman looked at the evidence and drew conclusions about how the world worked. As a result, his analysis is both practical and scientifically sound, at least to the extent that any economic theory can be. Reality, in sum, is a mighty potent tool in the pursuit of the truth.
Of particular relevance to CS is Friedman’s pioneering work on money supply theory. His lucid analysis on that front has been widely celebrated and so we’ll simply close by referencing his final essay on the subject, which appears in today’s Wall Street Journal (subscription required): “Why Money Matters.” To summarize the piece, keep your eye on the quantity of money, Milton asserts last time.