The United States economy grew slower than expected in the third quarter and the housing market remained weak, coming in at 28 percent below last year’s levels, according to a report in the Financial Times’ online edition, FT.com.
U.S. economic growth was estimated to be 2.6 percent by the Bureau of Economic Analysis, but that is less than the 3 percent growth Wall Street analysts had expected, FT.com reported.
Analysts had forecast that 2010 would see an upturn in housing, but are now predicting that prices will decline by as much 10 percent in the next year. Some Wall Street economists are now saying that major intervention is needed by Washington to head off prolonged stagnation, according the news source.
House prices rose 0.7 percent in October, but for the last 12 months have fallen almost 3.5 percent. “We thought housing would bottom in 2010, but it looks like it will take another year,” Standard & Poor’s Chief Economist David Wyss told FT.com.
Experts told the news provider that rising interest rates are hurting the housing market as they make it more expensive to refinance an existing mortgage or get a new loan. This served to push loan applications to their lowest level since April.