Housing construction in the U.S. declined more than forecast last month to the lowest level in three years as waning demand left builders with a growing number of unsold homes.
The 6 percent decrease in housing starts to an annual rate of 1.665 million followed a 1.772 million pace in July, the Commerce Department said today in Washington. Building permits dropped for a seventh straight month to the lowest level in four years and a sign home construction will keep slowing.
The battered U.S. housing market poses a risk of a larger slowdown in the economy and reinforces economist forecasts that Federal Reserve policy makers tomorrow will keep interest rates unchanged for a second month. Producer prices rose less than forecast last month, suggesting inflation is cooling along with economic growth, a Labor Department report showed today.
``There's no doubt the housing market is declining and we expect it to continue to decline through most of 2007,'' said Phillip Neuhart, an economist at Wachovia Corp. in Charlotte, North Carolina. ``Combined with the PPI data, it really sits with the Fed-on-hold scenario.''
This is indeed very bad news, and yes I agree with Atrios that the biggest losers will not be home owners, but those who will lose their jobs in new home construction, although some of that slack could possibly be picked up with jobs in renovation. The really sad thing is that here in Ohio, a lot of these jobs are filled by people formerly employed in the manufacturing sector. They are going to get screwed again by the Bush administration's economic policies.
They also owe a lot of the state of the home building market to Alan Greenspan, who, to get Bush through the 2004 election kept interest rates artificially low to keep a fundamentally unsound economy going. These low interest rates caused overbuilding, and helped Americans pile on way more debt than they ever should have. Time to pay the piper.