Monday, April 2, 2007

Is the Bubble about to Burst?

The housing market has seen better days. In the article "New-home Sales Fall to Seven-Year Low" on, it appears the economic report has shed some light on the current housing bubble – it has still not leveled out. On March 26th 2007, the home sales for February were released and disappointment swept the economy. The number of unsold homes rose 1.5% to 546,000 which is an 8.1 month supply – the largest surplus since January of 1991, which was at the end of a recession. The news only adds to the current housing issues that are under major debate. The number of unsold homes unsold shocked the market and caused the overall stock market to end on a down note. Many economists feel that since February numbers were bad there needs to be a strong rebound in March due to the historical heavy spring buying season. If February and March are both down months than the housing sector will probably not rebound this year. Though there was a cold February as Stephen Stanley, chief economist for RBS Greenwhich Capital states "it is dangerous to overinterpret the February numbers given the weather, so it is probably best to wait until March and see what a more normal weather month brings." So, the numbers in March will most likely rebound holding off the down spiral that has been common place in the housing industry for several months now. Once the new homes sold numbers climb the economy will once again see a boost from the housing sector within the market. Furthermore, a positive effect on the economy from housing will still take some time despite the results of March due to the market being very fragile and tight right now.



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