Posted on 11/20/2006 11:25:43 AM PST by Toddsterpatriot
Home Sales Fall in Most of the Country This Summer; Leading Indicators Rise
NEW YORK (AP) -- The feeble U.S. housing market showed more frailty in October when home sales plummeted in 38 states, hitting Nevada, Arizona, Florida and California particularly hard, government data showed on Monday.
The once-booming real estate market's persistent weakness over the past year has reined in expectations for economic growth but hasn't been severe enough to offset a rising stock market, lower gas prices and improved consumer expectations.
The National Association of Realtors reported Monday that sales of existing homes fell in 38 states during the summer. Sales retreated to a seasonally adjusted annual rate of 6.27 million units nationwide, down by 12.7 percent from the same period a year ago. Nevada, Arizona, Florida and California led the declines.
Home prices also dropped: The realtors' survey showed that the midpoint price for an existing home sold during the summer dipped 1.2 percent year over year to $224,900. Some 45 metropolitan areas saw home prices decline.
Meanwhile, the latest report of building permits showed the slowest pace of annual growth in nine years in October. Housing construction slid sharply as builders tried to curb swelling inventories of unsold new and existing homes.
Stuart Hoffman, chief economist at PNC Financial Services Group, said he thinks the housing market still hasn't reached its low point.
"I think the permits numbers point to yet another flight of stairs down on housing before we hit the basement," he said. "On the other side, stocks are rising, consumer confidence is good and jobs are rising. Those factors are keeping this decline in housing contained."
A closely watched indicator of future economic activity release Monday provided further evidence of that trend.
The Conference Board, an industry-backed research group based in New York, reported Monday that its Index of Leading Economic Indicators rose 0.2 percent in October. Increased real money supply and improved consumer expectations helped offset the sharp decline in housing permits and weaker vendor performance.
"The economy is growing more slowly, but we have yet to have weakness spread beyond housing and motor vehicles to such a degree that we need to fear the proximity of a hard landing," said John Lonski, chief economist of Moody's Investor Service, referring to when the economy turns from growth to a recession.
The housing market slowdown has weighed on the leading indicators index this year. But all told, strengths and weaknesses in the leading indicators have been roughly balanced, according to the Conference Board report. The index stood at 138.3 versus 139.1 in January -- its peak so far this year. The index has declined four of the last seven months.
The Conference Board's labor economist, Ken Goldstein, said the October index suggests "the economy is unlikely either to reheat or to get significantly cooler."
"Instead, the kind of slow growth now being experienced could continue right through the winter and into the spring," Goldstein said.
In another sign of moderating economic growth, the Federal Reserve held its benchmark interest rate steady last month at 5.25 percent for the third straight session. The Fed had raised interest rates 17 times beginning in June 2004 to stave off inflation, before halting its campaign of credit-tightening in August.
Heck, some of the apps I see I'm happy if they have a JOB.
;-)
When foreclosures go up like they are doing now in great numbers the easy finacing dries up also. 20% will be the minimum downpayment especially in a falling market.
"I get as sick of snow and cold weather as the next guy, ..."
I'm a little odd I guess. To me the first snow is magical. A hike in the woods on a snowy day is as peaceful as it gets. And a white Christmas is extrordinary. I will admit, in late Febuary, I start getting tired of it, but by then, we're getting on to the end of winter.
I love it here.
Oh, and how could I forget, we have the Buckeyes!
When the demand shrinks, the price will go back down.
The Bucks! Best thing about Ohio!
I like the first snow too.
What does bother me is when we don't get snow all winter and then in SPRING when it's SUPPOSED to be warm...it won't stop snowing!
Our local paper did a story on this last Sunday - housing prices are down from a few months ago, but they're still UP from a year ago. So, Florida's doing just fine. Why trumpet only the bad - the whole truth is more interesting.
Just be nice to see the sun once a week. This grey is depressing!
"What does bother me is when we don't get snow all winter and then in SPRING when it's SUPPOSED to be warm...it won't stop snowing!"
I'm with you there, but no place is perfect. :)
You know why foreclosures are up??? Because we are coming off a period of historic lows in foreclosures! Home prices have appreciated so much in recent years, no one was foreclosing. We had the lowest foreclosure rates ever. Yes they have increase, but they are still well below the historical average.
Gosh, can I still get one of those if the market crashes?
So where is everybody living, in refrigerator boxes?
Oh, wait, guess it just means they aren't moving. They still have a house.
The article in a paper that I read over the week-end said that although there were fewer sales that prices had not dropped. A lower median sales price does not indicate falling prices. It simple means that the difference between the lowest and the highest prices was slightly lower. It's basicly a meaningless statistic.
By the way, for anyone who doesn't already already know, stay away from PNC. They're really bad news.
In 2005 some ridiculous percentage of homes were bought with ARM's and interest only loans. You ain't seen nothing yet, those loans will have to be refinanced in the next couple of years and with prices falling there are going to be millions upside down on their mortgage.I saw it happen here in So Cal in the mid 90's. People just walked away from the homes and took a beating.
Unless you are talking about total wealth which many around here like to spout about. If your total wealth drops that much it affects the total wealth of the American people.
I don't subscribe to home equity as a measure of wealt since it's so fluid.
The other point that is often overlooked is the inability to stop loss in the real estate markets as opposed to the equity markets. If I want to limit my losses in the equity markets, then all I have to do is sell my mutual fund or place a sell order that kicks in when the stock drops to a certain price, and there will nearly always be a buyer on a moments notice. If I want to sell my house to cash out my equity, I will need to find a buyer, and that could take months and months or even years if I am unwilling to lower the price.
How's this for a laugh. Bought a small house after my divorce (credit was ok, not wonderful). Took an ARM. Refinanced at better rate in 2004, wasn't taking any cash, got laid off two weeks before closing. Bank wouldn't close cause I was unemployed. Took 10 months to find a job - at $14K less salary. Payments going up, got behind on payments, got a 2nd mortgage to catch up. Holding on by the skin of my teeth. Trying to up my credit rating but will take awhile. Need to either win the lotto or find me a rich hubby, lol. Meantime, there's 14+ sale signs in my plan of 6 blocks.
Median price is the price where half the homes sold for more and half of the homes that sold went for less. It is probably the best statistic to tell you were the market is going.
I am a little surprised that no one has made the observation that homes are not what they were 10 - 20 years ago, making comparisons meaningless.
Houses now tend to be bigger and have more luxury features than in the past.
A typical house 20 years ago was probably a plain, 1700 sqft box on a 50' x 100' lot.
Today, new houses start at 3,500 sqft. The older houses have had additions, new kitchens and baths.
IMO a substantial percentage of the increase in house prices can be traced to "home improvement".
Not really when you factor out two years of interest on 95% financing, real estate taxes, insurance, and the real estate commission if you have to sell.
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