US Home Construction Plummets Again
The housing crisis in America was shown to have heightened in new figures published on the 17th October, and highlighting the month of September 2007 as the least productive for 14 years in terms of new home construction.
As reported by the Commerce Department, Septembers figure was 10.2 per cent less than the previous month. Far exceeding the 4.2 per cent drop anticipated by construction industry analysts, the decline represented the biggest month-on-month drop recorded since March 1993.
In response to the news, the economists suggested that housing construction could be set to plummet into even further difficulties. Compared to the same time last year, activity in the industry is now operating at a 30.8 per cent loss.
The situation was described by BMO Capital Markets economist Michael Gregory, who stated: "The contraction in housing is transitioning from an average downturn to among the worst in the post-World War II history". He added: "As the current downturn probes deeper depths, the risk of an outright recession will mount".
Sales of homes have been on the descent since 2006. In recent months, the situation has been exacerbated as mortgage lenders have placed tighter restrictions on loans to counter the rise in defaults.
A day prior to the Commerce Department's data-release, the National Association of Homebuilders had reported that, for the eighth month in a row, a drop had been recorded in the index of builder confidence.
A prevailing sentiment, however, among industry experts, is that recession will not strike if an interest rate cut is implemented by the Federal Reserve.
Applications for permits to construct new buildings - viewed as an indicative measure of future growth - also shed some last month; a 7.3 per cent drop taking them to a 14 year low.
Source - Construction International's US Reporter
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