Housing recession deepened in June 2007
WASHINGTON — The housing recession deepened in June and durable-goods orders unexpectedly fell, suggesting the US economy will slow in the second half.
Sales of new homes fell 6.6 percent, the biggest drop since January and more than economists predicted, the Commerce Department said yesterday. It also said that orders for goods meant to last several years, excluding airplanes, cars and trucks, fell 0.5 percent.
The figures signal that the economy will struggle for the 3 percent growth that analysts estimate for last quarter.
“The economy is sort of stuck in the mud here,” said Ethan Harris, chief US economist at Lehman Brothers Holdings in New York. “The idea that we’re going to get a pickup in the second half is wishful thinking at this point.”
Home builders may have to cut prices even more and sweeten incentives to turn sales around.
Rising mortgage rates and stricter rules to qualify borrowers with poor credit histories will extend the worst housing slump in 16 years.
“This points to a further construction drag on growth,” said Zoltan Pozsar, senior economist at Moody’s Economy.com in West Chester, Pennsylvania.
June purchases totaled 834,000 at an annual pace, down from May’s revised 893,000. The median forecast in a Bloomberg survey of economists was 890,000, down from May’s originally reported 915,000.
Sales were down 22 percent from a year earlier, falling 27 percent in the Northeast, 23 percent in the West and 17 percent in the Midwest — but rising 7.6 percent in the South.