US housing slump fuels crash fears
Posted on August 26th, 2006 by ecthompson
Foundering American property market could spark global slowdown worse than dotcom collapse
Heather Stewart, economics correspondent
Sunday August 27, 2006
The Observer
The downturn in the US housing market will force businesses to slash 73,000 jobs a month in the new year and could be more damaging to the world economy than the dotcom crash, economists have warned.After official figures last week showed that the number of new homes sold in July was 22 per cent lower than a year earlier, while prices were almost flat, fears are mounting that the ‘orderly’ housing slowdown predicted by the Federal Reserve will become a full-blown crash.
‘Things do seem to be getting worse very quickly. Freefall is a strong word, but I think it’s the right one to use here,’ said Paul Ashworth, chief US economist at Capital Economics.
House prices have been rising at unprecedented double-digit rates in recent years, giving homeowners massive windfalls and supporting a wave of investment in new construction. However, the number of unsold new homes is now at a 10-year high. more
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Economy is floundering? You mean giving away money to rich people doesn’t help everyone? That’s hard to believe. (dripping with sarcasm)
