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Crisis In The Housing Market

Housing Keeps Falling

Construction of houses and apartments slowed in June, according to figures the government released this morning. Housing starts — the number of new construction projects — fell by 5 percent compared with the previous month.

That fits with the broader trend we've been seeing in housing lately, but it leaves a fundamental question unanswered. Here's a very quick recap.

The bubble started to pop in 2006. The market hit bottom in the first half of 2009, then crept up through the beginning of this year, helped by government programs designed to prop up the housing market.

But in the past few months, as those programs have started to wind down, the market has started to head south again — as evidenced by sales of previously owned homes and the home builders' confidence index, among other measures.

To some degree, the decline is the natural aftermath of the government programs: At least some people who would have bought a home this summer hurried up and bought one in the spring, before the government's home-buyer tax credit expired.

So the key question now is whether we're in a brief hangover brought on by the end of the government subsidy, or whether the subsidy just stalled more significant declines in the housing market. If it's the latter, we could be headed for a significant double dip in housing.