Building-Permit Drop May Signal Renewed U.S. Housing Slump, Feldstein Says

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Feldstein Says Falling Permits May Signal U.S. Housing Slump
By Steve Matthews and Margaret Brennan


May 18 (Bloomberg) -- A decline in U.S. homebuilding permits last month may indicate a renewed housing slump as demand weakens after the expiration of tax credits, Harvard University economics professor Martin Feldstein said.

Permits in April fell by the most since December 2008, according to Commerce Department figures released today in Washington. The report also showed housing starts rose to a 672,000 annual rate last month, exceeding the median forecast of economists surveyed by Bloomberg News and the highest level since October 2008.

“Permits are an indication of what is going to happen in the future,” Feldstein said in a Bloomberg Television interview. “With the first-time home-buyer credit behind us, we are not going to see the strength of housing demand we have in the last few months as people rushed to take advantage of that program.”

Feldstein, a former president of the National Bureau of Economic Research, said the potential for another decline in housing and less monetary stimulus from the Federal Reserve cast doubt on whether the U.S. has fully emerged from a recession that began in December 2007.

“I hope the recession is behind us,” he said, reiterating his warning from January that U.S. growth may falter this year because of waning stimulus from federal spending and tax incentives for purchases of homes and autos. “There is still uncertainty about the future pace of demand now that the government programs and the Fed programs aren’t there to support it.” .........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=ayfYrpivg5uA&pos=5