Housing Market Set To Collapse
-- March 18, 2003
By anyone's standards, the economy is limping along. Just about the only driver of economic activity right now is the strong housing market. However, the signs are mounting that the residential real estate boom is about to go bust.
In just the past two days, two separate reports indicate trouble for the housing market. Today, the Commerce Department reported that housing starts sank 11% from January to February. Yesterday, the National Association of Home Builders announced that its index measuring home building activity deteriorated sharply this month. The overall housing market index, which normally fluctuates by one or two points per month, plunged a whopping 10 points to 52 in March! Builders cited a drop off in sales of single-family homes and buyer traffic, signaling that housing starts may continue falling in March as well.
Despite the lowest mortgage rates in decades, Americans just aren't willing to make major purchases right now. Even more than war worries, they're concerned about jobs, deteriorating investment portfolios, and slowing income growth. And even a quick end to the war won't wash those uncertainties away. As the economy continues to slump, the housing market will sink along with it.
related article: New Home Starts Plunge 11 Percent