February 19, 2007
Housing Crunch Isn't Over Yet
Housing Crunch Isn't Over Yet
Housing is proving to be one of the biggest wild cards in the economy in 2007 as analysts are deeply divided about whether the worst in the downturn is over or there is much more pain to go.
Only 9% of economists say the housing decline ended in 2006, according to a USA TODAY survey of 55 economists. Another 42% said the downturn will end in the first half of the year, and 45% said housing will bottom out in the second half. "This is one of those hot-button issues," says Christopher Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi. He estimates the downturn ended last year. "I don't know why people are so pessimistic."
When housing bottoms out is key for the economy. Thus far, the fallout has been small. The economy grew at a faster pace in 2006 than in 2005 even though sales of previously owned homes fell 8.2%, the biggest drop in 17 years, the National Association of Realtors says.
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