Originally published February 23 2006
Sales of new houses dropping
by Mike Adams, the Health Ranger, NaturalNews Editor
The Commerce Department has said that sales of new single-family houses has fallen by 11.3 percent; analysts expected an 8.7 percent drop. Many say this is a clear indication the five-year boom is almost over.
Sales of new houses plunged in November by the largest amount in nearly 12 years, the most dramatic evidence yet that the housing market is starting to cool off.
The Commerce Department said Friday that sales of new single-family houses fell by 11.3 percent last month to a seasonally adjusted annual rate of 1.245 million units.
Analysts said they still expect sales of both new and existing houses to set records for a fifth consecutive year in 2005, but are forecasting sales declines of about 6 percent next year as demand falters under the impact of rising mortgage rates.
The Federal Reserve pushed interest rates up for a 13th time this month with rate hikes expected in January and March as the central bank tries to slow the economy to keep inflation under control.
The fear is that the Fed's credit tightening could cause a sharp falloff in housing demand, sending house prices plunging.
That could send a shock through the economy similar to the collapse of the stock market bubble in 2000.
House sales were down in all parts of the country except the Northeast, where they staged a 13.4 percent surge, the biggest percentage increase in this region since January 1994.
Sales were down 22.1 percent in the West, the biggest decline since February 1994, while sales fell 18.3 percent in the Midwest and 5.5 percent in the South.
Analysts had forecast a big gain in aircraft orders because of the success Boeing Co. had at the Dubai air show.
For November, Boeing booked 148 new plane orders, compared to 36 orders in October.
"Higher energy prices stemming from the hurricane season and fundamental energy supply shortages are clearly having a negative impact on the economy," said David Huether, chief economist for the National Association of Manufacturers.
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