New-Home Sales Bulldozed

Assuming the builders can keep themselves in check, he says, perhaps optimistically, "we expect by late spring, early summer that the demand and supply sides will be in balance and we'll see improvement on those starts numbers."

Yet another move that could dampen home-buying activity was Freddie Mac's(FRE) announcement on Feb. 27 that it is tightening the screws on subprime mortgages, in a move to raise underwriting standards and screen out problem borrowers before they receive loans.

It's a welcome move but one that should have been made at least two years ago. Concerns that clamping down on irresponsible lending will somehow be detrimental to the economy can be allayed by a quick look at last month's news out of HSBC(HBC), which is facing billions in losses on subprime lending. Slowing down an overheated engine is usually a good thing.

>To order reprints of this article, click here: Reprints