Housing Slump in the Second Inning?

Posted by: Peter Coy on May 23, 2006

Housing construction has cooled abruptly.Barry Bonds.jpg Economist David Rosenberg of Merrill Lynch calculates that the number of starts on construction has fallen at an annual rate of 56% over the past three months. Nobody thinks the market will continue to contract at this extreme pace. Rosenberg thinks construction will keep cooling, but not quite so abruptly from now on. His guess: Measured by duration, the housing slump is only in its second inning.

Reader Comments

Kent Schrader

May 30, 2006 8:31 AM

The housing slowdown is no surprise. Several factors are contributing - prices that have outstripped incomes, rising interest rates, the withdrawal of many speculators from the market, and the large inventory of new homes on the market. That last factor will continue to worsen due to the long lag time between initial commitment for land and/or construction and the sale of the property. Even if the "spigot" could be turned off immediately, it would take 9 - 12 months before new housing supply could be shut off. This means the demand / supply imbalance will continue to grow into 2007. Weak builders will fail and "bottom fishers" will come out of the woodwork to pick up the "good deals." This fall and winter will be the real test.

miguel

August 29, 2006 10:47 PM

lets reduce the house so we can sell the house

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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