Newsweek: The Worrying Housing Bust,
With fewer buyers, home construction, sales and prices have weakened. In August, housing starts were 20 percent lower than a year earlier. Last year, sales of new and existing homes totaled almost 8.4 million; next year the NAR expects 7.4 million. Construction workers, real estate agents and mortgage bankers will lose jobs. Consumer spending (computers, cars, vacations) will also suffer, as the borrowing and buying against rising real-estate values subsides. Indeed, the end of the cheap credit that fed the boom means that many borrowers will face higher monthly payments.
The housing downturn in Massachusetts will last longer, and prices will fall further than first projected, according to an economic forecast released yesterday.
Housing prices will slide by as much as 10 percent from their 2005 peak before hitting bottom in early 2008, according to the forecast by the New England Economic Partnership. They should stay flat through 2009, before beginning to climb gradually.
A year ago the nonprofit research group forecast prices would decline less than 3 percent, bottom at the end of 2006, and regain their peaks in early 2008.
U.S. housing slump deepens, spreads,
First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too.
Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse.
“I don’t think we’ve seen the bottom yet, and I don’t see anything that says it’s going to get significantly better in 2007,” said Bob Nardelli, Home Depot’s chairman and chief executive officer.
… Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday.
The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations.
But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent.
“The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients.