Inquiring minds are reading that builders began work on fewer homes than projected in December and a sign the industry continues to struggle more than a year into the so-called U.S. economic recovery:
Housing starts fell 4.3 percent to a 529,000 annual rate, the lowest level since October 2009, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg News survey called for a 550,000 rate. A jump in building permits, a proxy for future construction, may reflect attempts to get approval before changes in building codes took effect at the beginning of this year.
Companies like KB Homes and Lennar Corp. project demand will be slow to rebound as elevated unemployment and mounting foreclosures discourage buyers. While low borrowing costs and falling prices are helping revive sales from last year’s post tax-credit slump[SC editor’s bolding], Federal Reserve policy makers are concerned housing may undermine the economic expansion.
“With sales still near record lows and a lot of unsold properties in the market, there’s very little reason for builders to add more homes to the supply,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, who had forecast starts would drop to a 527,000 rate. “Housing remains a key downside risk to the economy.”
Notice how ‘sales still near record lows’ yet The Fed has kept borrowing costs artificially low. Just how bad would real estate be without the subsidy? And, since we are out of money, how can we afford this subsidy to begin with?
Can we just have a free market? Is it that tough for the solons in DC to act American?
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