Housing Starts, Permits Sag; Schumer Warns 'Worst Is Still Yet to Come'
Housing starts fell to their lowest level in 12 years last month, while permits for new construction also declined, pointing to a further weakening of an already battered housing market.</br></br>Those numbers, as well as a report showing that builder confidence is at a record low, prompted Sen. Charles E. Schumer (D-N.Y.), chairman of the Joint Economic Committee, to declare during a hearing yesterday that the "worst is still yet to come." The number of foreclosures has jumped in some parts of the country, as interest rates increase on adjustable-rate mortgages made to risky borrowers during the now long-over housing boom.</br></br>Lawmakers and economists warned that problems in the subprime mortgage market could drag down the entire economy, despite the Federal Reserve's decision Tuesday to cut a key interest rate to decrease borrowing costs.</br></br>"For the first time in years, the 'R word' -- recession -- is being discussed far and wide as a real possibility," Schumer said.</br></br>Robert J. Shiller, an economics professor at Yale University known for his study of investment bubbles, submitted written testimony saying that "the collapse of home prices might turn out to be the most severe since the Great Depression."