The struggling real estate market took another dip this last month, according to the Commerce Department. Housing starts, a measure of new homes being constructed, fell 0.6%, while permits for new construction, an important indicator of future activity, fell more than anticipated, decreasing 7.8% in February to the lowest level in 16 years. The Northeast saw the worst drop, as new construction fell 27.7%. It remained unchanged in the Midwest, with a slight increase was seen in the South and the West.
Experts expect that the rates will continue to fall this year but expect them to rebound in 2009. Lasts year, residential construction fell by a quarter amid the slumping economy and the subprime mortgage mess fallout, as banks and other lenders have found many with credit scores below the prime rate who were granted mortgage loans struggling to repay them and unable to sell or refinance as the prices of homes have fallen drastically.
The number of home foreclosures rose 60% in February, and bank seizures more than doubled from the same time last year, according to RealtyTrac Inc. The real estate market, which has been the biggest victim in the faltering economy, has continued to struggle to regain its strong foothold in the U.S. The Federal Reserve has been trying to combat the falling home prices and rising foreclosures by lowering its interest rate, cutting it again this week by 3/4 a percentage point to 2.25%.
Single-family home starts have fallen 62% since they peaked two years ago. Most experts say it is unclear when the housing debacle will subside and get back on track but some have estimated the bottoming out has to be near.
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