The fifth straight monthly decline in homebuilding reported by the Commerce Department on Friday suggested the housing market remained depressed at the start of the third quarter. Aside from the weather, the housing market remains constrained by higher mortgage rates and house prices.
"Even though lower interest rates should provide ongoing support to new home sales, the existing oversupply in some regional markets could be a bigger constraint than we previously anticipated," said Paul Ashworth, chief North America economist at Capital Economics.
"Residential housing construction will not be contributing anything to this quarter's real GDP growth," said Christopher Rupkey, chief economist at FWDBONDS.
But a jump in new housing inventory to levels last seen in early 2008 could limit any rebound in housing starts.
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