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April 7, 2003

IMF: U.S. housing bubble could burst

WASHINGTON (AP) -- One more threat for the fragile economy -- the possibility that America's booming housing market could be headed for a bust.

In a survey of global economic dangers, the International Monetary Fund warned last week that the U.S. housing market, after two years of record sales over and strong increases in home prices, could be headed for a fall.

The study said that based on past experience, a housing bubble in an industrial country has a 40 percent chance of being followed by a sharp drop in prices.

It did not explicitly forecast a U.S. housing bust, but did raise concerns about its possibility, especially because past housing declines have been associated with periods of global economic weakness, such as the U.S. recessions in 1991-92 and 1981-82.

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