Building of New Houses Plunges ; Interest Rates, Weather Cited

The Washington Times › April 22, 2005

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Summary

Housing construction plummeted by 17.6 percent last month - the most in 14 years - as rising interest rates and gloomy weather took their toll on the red-hot real estate market, the Commerce Department reported yesterday.

The unexpectedly sharp drop in new-home construction starts to a 1.84 million annual rate shows the sensitivity of the housing market to an uptick in mortgage rates, which rose by a half percentage point last month at the coaxing of Federal Reserve Board Chairman Alan Greenspan.

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Building of New Houses Plunges ; Interest Rates, Weather Cited

After five years of boom conditions, many market observers believe housing is in an unsustainable bubble that could burst abruptly in the face of higher rates. Even industry boosters...

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