Housing Starts Plummet

Single-family housing starts plummeted 11.2% in March from record levels in January and February as builders got overextended.The U.S. Census Bureau reported that single-family starts fell from a seasonally adjusted annual rate of 1.81 million in February to 1.59 million in March. Starts are currently ahead of last year's record pace by 2.6%. Builders got ahead of themselves due to the unusually warm winter, according to Celia Chen, director of housing economics at Moody's Economy.com. "Seasonal factors are distorting the data," she said, but a downward trend in housing starts is "pretty clear." Moody's Economy.com is forecasting that single-family starts will slow by only 5.9% this year even though its economists expect the 30-year mortgage rate to hit 6.9% in the fourth quarter. "Rebuilding in the Gulf Coast will help to keep things stronger than they otherwise would be," Ms. Chen said. "Next year, things will really slow down." The Census Bureau, an agency of the Commerce Department, can be found online at http://www.doc.gov, and Moody's Economy.com can be found at http://www.economy.com.