Housing bubble threatening economy

Homes glut pressures US economy

"The US economy peaked in January and is tipping into an unstoppable "bust" whether or not the Federal Reserve halts its cycle of interest rate rises, Lombard Street Research has warned."

"The economic research group said the US property market was crumbling, taking away the key prop of the consumer boom."

""The real US hard landing starts now," said Charles Dumas, the chief global economist. "It's going to be a long grind for two or three years, not as bad as Japan but going in that direction."

The price of new houses in the US has been tumbling for five months at an annualised rate of 18.4pc, while mortgage applications are down 20pc."

"Elsewhere, Banque AIG has warned that a US housing bust risked plunging the economy into a deeper downturn than generally expected."

""House prices have been falling hard for five months and all the guidance from builders points to a continued fall. You cannot ignore the threat," said Bernard Connolly, chief global strategist."

""A fall of perhaps 20pc in US residential construction in the course of the next year or so is not an implausible scenario. That would be a big deal. Rates will have to come down, perhaps by rather a lot," he said."