Bubble watch

Not with a bang, but a slow hiss: The housing market deflates.

Published February 27, 2006 6:55PM (EST)

Because How the World Works is increasingly obsessed with the U.S. housing market, we bring you the latest exciting news in new-home sales -- down 5 percent in January 2006, from last December.

About 1,233,000 new houses were sold in January. That's still a very big number, representing a pretty healthy market, but it's the fourth decline in the past six months, and it comes in the face of a record number of new housing starts in January.

And what usually happens when you oversupply a market that is already slowing down? Meltdown!

Let's recap: Not only has the U.S. housing bubble been keeping the U.S. economy afloat, but it is the main source of liquidity enabling U.S. consumers to continue buying, which keeps the entire global economy humming. With sales of existing homes and new homes both on their way down, and mortgage rates on their way up, it's probably not a good time to think about refinancing, again.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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