Home buyers slam on brakes in Feb.
Staff Staff -- Home Textiles Today, April 7, 2003
Worried about jobs, a weak economy and more recently a war with Iraq, and then snowed in for part of the month, Americans brought to a halt an historically long run-up in the broad housing market.
Consumers put on hold their plans to buy a first home or trade-up to a better one, and sent every segment of the housing market reeling downward last month, raising a yellow caution flag and fears that the housing bubble may be ready to burst.
Hardest hit of all was the forward-looking segment of the market, housing starts — also the one most susceptible to bad weather — which tumbled by 11.0 percent to a seasonally adjusted level of 1.6 million units as home builders grew increasingly antsy about a fragile American economy and Americans' willingness to commit to a big-ticket purchase in uncertain times.
Falling almost as far was the highly volatile market for expensive new homes, which skidded down by 8.1 percent to a seasonally adjusted level of just 854,000 units, the lowest level in more than two years.
Existing-home sales, by far the largest segment of the housing market — accounting for slightly more than 70 percent of all housing activity in February — fared better, but still fell by 4.3 percent, the biggest one-month drop since an even larger 6.1 percent decline put up in March 2002.
David Lereah, chief economist of the national Association of Realtors, said the slide in the market for existing homes was not entirely unexpected given a run-up the month before, when sales grew by 1.2 percent over the year-before level.
In part reflecting builders' jitters, in part bad weather, housing starts skidded down at a double-digit, flat or declining pace in every region of the country, with the Midwest hardest hit with a 19.0 percent slide.
The entire slowdown during February occurred in the market for single-family homes, which declined by 13.7 percent. Given a strong January, some pull-back was inevitable, said Kent Conine, president of the National Association of Home Builders.
Housing by region
Month-to-month % change
|Existing home sales||Housing starts||New home sales|
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