Builders constructed 2 million housing units nationwide in 2005, the year the boom peaked. So far this year, housing starts have fallen to an annual rate of 1.2 million units through September, and economists expect the number to drop to an annual rate of 1 million by mid-2008.
Developers are reeling from sharp increases in loan defaults, which cause lenders to be far more cautious about new mortgages. The result: sinking home prices, surpluses of unsold homes and an increase in canceled orders.
This month, credit rating agency Standard & Poor's downgraded three of the four largest home builders by market value -- D.R. Horton, Pulte and Lennar -- to noninvestment grade, or junk status.
