Another vicious circle was created by the housing stock surplus (Figure 4.4) generated by
a combination of an excessive production of new homes which outstripped demand, a foreclosure
tsunami arising from adjustable-rate mortgages resetting, overvaluation of properties,
speculators withdrawing from the market and borrowers overstretching themselves. During
October 2007 the US Department of Housing recorded that the number of new building permits
granted in the US (a signal of future construction activity) fell 6.6%, the biggest monthly