Booming housing market may be cooling
July 19, 2005
The US Commerce Department reported on Tuesday that new starts on houses and apartments totaled 2 million in June, the same rate as in May.
While single family housing starts fell by 2.5 percent in June, this was offset by a rise of 14.2 percent in starts of apartment buildings.
The June figure was well below the increase of 1.1 percent in total housing starts that analysts had anticipated.
Along with a revised decline of 1.1 percent in housing starts in May, some analysts think that the booming US housing market may be on the verge of cooling off.
However, analysts say that they do not foresee a huge drop in housing activity because although mortgage rates have begun to rise, they are still at levels very attractive to home buyers.
Rates are near a 40-year low and this, coupled with low supplies and the country’s strong economic growth will keep activity strong for at least the next few months, according to one analyst with Global Insight.
Another analyst said that in his opinion, it would take a significant jump in mortgage rates to cool off the housing market in the foreseeable future.