Housing: Still searching for a bottom

Applications for new building permits plummeted to the lowest level since 1996.

Housing starts rose to an annual rate of 1.53 million in April, according to the Census Bureau report, from the revised 1.49 million pace in March. Economists surveyed by Briefing.com had forecast a slip to a 1.48 million pace in April.

But building permits, which are often seen as a measure of builder's confidence in the market, sank to an annual rate of 1.43 million in April from a revised 1.57 million in March. It was the lowest reading since June 1997. Economists had forecast a dip to 1.52 million.

As housing goes, so goes the economy. There is a real danger that the housing slump will cause people to pull back on spending and lead the economy into recession. Much of the continued economic expansion was the result of higher home prices and the feeling of wealth that accompanied those high prices. With two thirds of the economy being consumer spending, if that spending slows considerably so will the economy.