Tax Uncertainty and Homebuilder EFts

Michael Johnston submits:

The U.S. housing market, after having been battered and bruised during the recent recession, had staged an impressive recovery in recent months as belief that the market has finally hit bottom seemed to gain support. But new data reveals the true fragility of the housing recovery, and indicates that the potential for a “double dip” in this industry is very real.

New home construction fell sharply in October, as housing starts declined 10.6% compared to the previous month to a seasonally adjusted 529,000. When compared to last October, the results reflect a disastrous 30.6% drop. The steep decline came as a surprise to many analysts who had been anticipating an uptick for the month. The surprise loss shows the true impact that uncertainty over whether Congress would extend the $8,000 tax credit for first-time home buyers beyond its initial November 30 deadline.

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