Archives: 2007 October

The National Association of Realtors® understandably put a positive spin on today’s release of existing home sales data for September which in its raw form show that severe problems continue in the housing market.

According to the National Association of Realtors®, the NAR , states that temporary problems in the mortgage market are easing and are expected to free some pent-up demand in the near future but mortgage conditions did disrupt existing-home sales and distorted prices on sales closed in September.

Total existing-home sales – including single-family, town homes, condominiums and co-ops – fell 8.0 percent to a seasonally adjusted annual rate1 of 5.04 million units in September from a downwardly revised pace of 5.48 million in August, and are 19.1 percent below the 6.23 million-unit level in September 2006.

The third quarter finished better than expected, with a 5.42 million annual rate of existing-home sales versus the 5.38 million forecast by NAR.

Lawrence Yun, NAR senior economist, said the decline is understandable. “Mortgage problems were peaking back in August when many of the September closings were being negotiated, and that slowed sales notably in higher priced areas that rely more on jumbo loans,” he said.

“The good news is that mortgage availability has markedly improved in recent weeks with interest rates on jumbo loans falling, and more people are applying for safer and conforming FHA mortgage products. Some of the cancelled transactions will move forward as buyers apply for other loans.”

The nation’s home builders’ confidence is at a record low.

The badly battered market for new homes fell further in October, and the new homes market outlook for the future remained at a record low level, according to the latest industry survey.

The National Association of Home Builders Wells Fargo Housing Market Index showed the overall confidence measure sank to only 18, the worst reading on record for the 23-year old monthly survey. The October overall confidence reading is the eighth straight month in which that measure has declined. It has fallen sharply, and is down from a reading of 74 only two years ago.

“Builders in the field are reporting that, while their special sales incentives are attracting interest among consumers, many potential buyers are either holding out for even better deals or hesitating due to concerns about negative and confusing media reports on home values,” said NAHB President Brian Catalde.

With statistics like these still rolling in those who think that the worse in the housing slump is already over must be sadly mistaken. Since housing is such an important part of the US economy the housing market statistics should give pause to anyone who thinks that the US economy will escape without a serious recession.

It’s a time to be vigilant and cautious, not over confident and bold.