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Fewer Investments in New Housing Cause Builders Pain

Posted by: RateAPY Bank Rates News
June 16th, 2010

Investments in New Housing Drops

Housing starts fell 10 percent in May as fewer people are making investments in new housing without the government incentive of a tax credit. Construction on single-family homes suffered a 17 percent drop, the worst decline since 1991. The annual rate of homes under construction is now at 475,000, the lowest on record.

The NAHB/Wells Fargo Housing Market index dropped to 17 in May from 22 last month. This index measures builders’ sentiment. A reading below 50 means builders believe the market is poor. Most builders and economists fault high unemployment and competition from foreclosures. Without a government tax credit as incentive to make an investment in new housing, builders fear a lack of demand.

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