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Sat, Dec 30, 2006 - Page 10 News List

Analysis: Clouds may be clearing over US housing market

AFP , WASHINGTON

Newport said that he expected the decline in residential construction to take about 1.4 percentage points off of US economic growth in both the fourth quarter of this year and the first quarter of next year.

"Afterward, the bites will get progressively smaller," he said.

Mark Vitner at Wachovia Securities said the question of whether there was "a housing bubble" is now irrelevant.

"The housing market hit a cyclical peak right about the time Hurricane Katrina hit New Orleans and has slowed appreciably ever since. Sales of new homes have fallen 24 percent since peaking in July of last year, and sales of existing homes are down 11.6 percent over this same time period," he said.

A correction is underway but not over, Vitner said.

"Booms and busts do not last forever," he noted.

"The housing market will eventually move back into balance, as builders build fewer homes and more households opt to become homeowners. We see this process as already underway," he said.

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