Financial meltdown hammers housing

WASHINGTON (AP) — The nation is on track to build fewer homes this year than at any time since the end of World War II, adding to the woes of an economy that analysts said Friday has almost certainly entered a recession.

Though the economic outlook darkened even further with bad reports on layoffs and consumer confidence, it was one of the quietest days since the financial meltdown began a month ago.

Wall Street’s tumultuous week turned out to be its best in five years.

The Dow Jones industrial average lost 127 points Friday but turned in the strong week because of two huge days of gains — a record 936-point jump on Monday and an increase of 401 points Thursday.

Friday was still marked by the huge swings that have become typical lately. At various points the Dow was up nearly 300 points and down nearly 250, and it finished with a triple-digit move for the 22nd time in 25 trading sessions.

A monthly survey by the National Association of Home Builders showed sentiment among home builders hit a record low in early October.

David Seiders, chief economist for the group, said builders are being hit by a double whammy from the financial turmoil: It’s harder for them to get loans to pursue new houses and more difficult to sell those they do build.

He forecast that builders will keep slashing production in coming months, with construction starts for new homes and apartments totaling just 936,000 this year, the lowest level since 1945.

“The builders are telling us that the financial crisis is really hurting because people justifiably have no idea where things are going,” Seiders said.

Analysts said new data released Friday showed it’s probably too late for the economy to avoid a recession.

Many of them said they now had recessions in their forecasts, believing that the overall economy, as measured by total domestic production, probably shrank in the July-to-September quarter, dragged lower in part by the continued plunge in housing.

In a bleak sign of future construction, applications for new building permits fell a sharp 8.2 percent to an annual rate of 786,000 units, the weakest level in more than 25 years.