Currently the us economy is facing a housing crisis as a result of bursting of the housing bubble .the housing bubble resulted from the reduced interest rates that encouraged the home buyers to secure mortgage at a lower rate to finance buying of houses.
The mortgage company possessed a lot of money making them to relax their lending rules. On the other hand, home construction companies started building houses at a very rapid rate to cater for increased demand of houses. The investors also bought more houses in the hope of selling them at a profit after a few years.
However when the Federal Reserve increased the interest rate the speculators stopped buying and many home buyers were not only unable to pay back the mortgage loan but they found that they cannot sell these houses. This reduced demand for houses has not only affected the housing market but other sectors of the economy as well.