June 19, 2001

Housing Market Begins To Show Signs of Weakness

Although the latest figures show that the housing market is not yet infested with termites, they are starting to chew at the foundation. It won't be long before the housing market ends up in rubble.

Housing starts remained flat in May compared to the previous month. Though the numbers remain above last year's levels, there are several signs telling us that the housing boom is waning. Low mortgage rates have kept the housing market attractive, but 30-year fixed mortgage rates have begun to creep up recently. Plus, more potential buyers have seen their job security jeopardized by layoffs and work stoppages. As the number of layoffs increases, the pool of interested house hunters will shrink.

We've already seen the current economic slowdown spread to consumer spending on retail items such as clothing and autos. We fully expect to see the same results in the housing sector.

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