The first sign of a rising economy of a nation is the growing real state and infrastructure development. Whether you look at the Middle East or the Indian-sub continent, the growing development has helped to keep up with changing times. For long USA’s development was considered upbeat with the growing skyscrapers in the early 1950s and 1960s. The well developed nation made sure that they created new trends in providing housing for the citizens. The situation today has reversed as housing slowdown has triggered an alarming impact on the rest of the economy.

The housing slowdown in US is a direct result of the recession that has been showing its effects for the last five years. In 2007-08 the housing slowdown intensified. Real estate builders are offering bigger discounts. To stop construction activity from losing its momentum, the builders are allowing homebuyers to take their time in giving instalments. The mortgage loans that were easily available against stock collateral are nose-diving.

First time buyers cannot think of buying property unless they have deep pockets or capacity to pay loans. The drop in middle class housing construction activity has impacted other industries also. In 2006, the interest rates had started to fall in some areas. The Commerce Department reported that by the end of the year 8.9% housing has declined. The applications for building permits fell through and reduced. The reasons given were that it was related to bad whether.

But two years down the line, the activity has slowed much more, yet another indication of a period of recession. Single family homes are at a record low since 1972. The green signal to make new homes has turned red, in the wake of plunging stock markets. Many regions felt that impact, as brokers were unable to convince buyers to invest in new homes. The lists of job seekers are growing in the country and real estate bubble has burst.

Many economists feared the housing downslide due to inflation. The economy is now in trouble as people are unable to pay off loans. The markets were to become stronger last July but it has not happened. Figures indicate sharp decline of 4.6% in sales in the last six months. Existing home sales account for 85% of the market. But since March 2007, they are on a continuous decline.

The average home price of US $ 225, 000 has fallen down to nearly 1.7%. Housing analysts feel that the price slump will lead to more sustainable development. But the consumers no longer believe them. The housing inventories have risen since last August. In 1999 condominiums were also added to the survey and since then the inventory is at its highest rate. As unpaid bills are hitting the roof, the middle class is feeling the heat. Those who have homes still have nothing to worry. But those who are looking for homes need to be careful. Mortgage is no longer easier, loans are not cheap. The party is over and the alarms are ringing loud and clear.

 ~ By N. Nagpal, economist and category author. 2008.