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Strategies & Market Trends : The Residential Real Estate Crash Index

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From: ldo798/17/2006 11:53:25 AM
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The Slide In U.S. Housing: No End In Sight
10:51:00, August 17, 2006
Leading U.S. housing market indicators continue to sink, which will increasingly weigh on consumer spending.

The NAHB home builders survey dropped again in August, with weakness in all regions. The survey noted that rising cancellations and substantial inventory growth in new and existing homes have crunched builders’ confidence, and they see no turnaround on the horizon. The survey slightly leads trends in real consumption growth, and warns that a marked slowdown in the latter looms. This bearish message is consistent with our consumer spending Model, which forecasts that real consumption growth will slow to below 2%. Bottom line: the economic risks are on the downside until some relief arrives, via lower bond yields, a weaker dollar and/or a sizable energy correction.

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