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Despite another drop in new home starts last month, housing analysts believe the housing slump in the London area might be bottoming out.

In July, single-detached starts were down to 105 from 137 units in the same month last year.

However, Canada Mortgage Housing Corporation market analyst for London, David Lan expects a market turn around by early next year.

"As the economy and the resale market start to recover, we expect to see some improvements in single-detached home starts in 2010," said Lan.

Year-to-date starts were down about 31 per cent with apartment starts offsetting some declines in single starts.