Construction of new homes fell significantly in October as the crippled housing market continues a cumbersome recovery. The seasonally adjusted annual rate of housing starts based on October numbers was less than 530,000, a decrease of more than 10.5 percent compared with September. The number was also a drop of more than 30 percent compared with October last year.
Economists were surprised by the severity of the decline as they had actually expected a small increase. The decline was in all likelihood caused by the uncertainty as to whether Congress would extend the $8,000 tax credit beyond November 30th. The credit was extended, earlier this month, and a $6,500 credit was implemented for existing homeowners.
