Housing: A Three-Story Pinch

Despite the apparently exuberant health of the U.S. economy, one of the nation's biggest industries—housing—is growing sicker week by week. It is pinched three ways: by listless demand, tight money and climbing construction costs. In February, the annual rate of private-housing starts slumped to a three-year low of 1,318,000, or 12% below the lackluster 1965 level. The Federal Reserve Board estimates that the slide grew even worse in March.

Last week, in a move aimed at bolstering housing by allowing it to raise its bid for increasingly scarce and costly mortgage credit, Washington lifted the...

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