Friday, February 16, 2007

Sharp Drop in Housing Starts Adds To Fear of Wider Economic Impact -

"A sharp drop-off in new-home construction is adding to concerns that the housing downturn's impact could linger well into this year and eventually seep into the wider economy.

Builders slashed construction of new homes last month to the lowest level in nearly a decade, a move that underscores the severity of the sector's slump and signals it will likely continue to be a drag on the economy at least through midyear. The slip in homebuilding last year subtracted more than 1 percentage point from inflation-adjusted economic growth over the second half of 2006.

The plunge in new homebuilding activity in January -- down 14.3% from December and 37.8% from January 2006 levels -- could eventually hasten a recovery by reducing the overhang of unsold homes, however."

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