Tuesday, October 16, 2007

Paulson: Housing Likely To Adversely Affect Economy

by Bill McBride on 10/16/2007 11:46:00 AM

From the WSJ: Paulson Says Housing Is Likely To Adversely Affect Economy

U.S. Treasury Secretary Henry Paulson offered a sobering view Tuesday of the pressure the housing market was having across the country, saying the decline stood "as the most significant current risk to our economy."

Mr. Paulson even acknowledged that problems in credit, mortgage, and housing markets were much more severe than anticipated.
Paulson Headlines Click on Headlines for Larger Image. (thanks to Brian for headlines)
"The ongoing housing correction is not ending as quickly as it might have appeared late last year," he said in a speech to Georgetown University Law Center, according to prepared remarks. "And it now looks like it will continue to adversely impact our economy, our capital markets, and many homeowners for some time yet." (Read the full text of Paulson's remarks.)
...
"The problem today is not limited to subprime mortgages as the number of homeowners having trouble making payments on prime mortgages is also increasing," he said.

Mr. Paulson said the housing correction was having a "real impact on our economy," citing how annual housing starts have fallen off more than 40% since early 2006. "It looked like housing construction had reached a bottom in the first half of this year, but starts have declined again since June and data on permit applications and inventories of unsold homes suggest further declines lie ahead," he said.
What a change in views. Just three months ago I was asking if Paulson worked for the National Association of Realtors: Is Paulson the New Lereah?