Sales of Existing U.S. Homes Decline to 10-Year Low; Median Price Tumbles

[marmar]

from Bloomberg:



U.S. Home Sales Fall to 10-Year Low as Prices Tumble (Update3)

By Kathleen M. Howley and Dan Levy

Aug. 14 (Bloomberg) -- Existing U.S. home sales fell to a 10- year low in the second quarter and the median price for a single- family house dropped 7.6 percent as the real estate recession deepened.

The median price tumbled to $206,500 from $223,500 a year earlier, the Chicago-based National Association of Realtors said today. Sales of single-family houses and condominiums fell 16 percent to 4.913 million at an annualized pace.

Prices are declining with the U.S. on the brink of a recession, consumer prices rising and 30-year fixed mortgage rates at a six year high last month. A third of all sales in the quarter were foreclosures or ``short sales,'' in which lenders take a loss on a property, the Realtors said. Bank repossessions almost tripled in July from a year earlier, RealtyTrac Inc., a seller of foreclosure data, said in a separate report today.

``It's getting worse,'' Rick Sharga, RealtyTrac's executive vice president for marketing, said in an interview. ``The number of properties that have been foreclosed on by the banks and still haven't sold is the highest we've ever seen.''

U.S. economic growth slowed to 1.8 percent in the second quarter as unemployment rose. Forecasters say home values will drop more. The S&P/Case Shiller home price index that tracks 20 cities may tumble as much as 12 percent this year, McLean, Virginia-based Freddie Mac, the No. 2 mortgage buyer, said in an Aug. 11 report.

California Prices

The biggest declines reported by the Realtors today were in Sacramento, the capital of California, with a 36 percent drop, followed by the metropolitan area around Cape Coral and Ft. Myers, Florida, down 33 percent.

Riverside and San Bernardino, California, tumbled 32.7 percent, and Los Angeles dropped 30 percent, according to the report. The metropolitan New York area, including parts of northern New Jersey and Long Island, fell 5.3 percent, and Boston dropped 11 percent. ........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aYkPC_mF5MwI&refer=home

[SheilaT]

1. Keep in mind that this is good news

for people who'd been priced out of the market in some places. And it's good news for someone newly entering the housing market. I plan to buy a home in about a year, and my only fear is that this price drop will suddenly reverse itself and everything will be as expensive as it was before all this happened. I'm not trying to time the market here, it's just that I've recently moved and signed a year's lease on an apartment, and I won't be ready to buy for about a year.

[marmar]

2. But it's not good news for economy based 70 percent on consumer spending.....

.... much of that spending fueled by easy access to home equity and credit cards, both of which have gone bye-bye.
In the long-term, I agree, it's good news. In the short term, it's going to be very, very painful because the Ponzi scheme is over.

[SheilaT]

3. You're right.

And Ponzi schemes are always bad, and people get very badly hurt when they collapse. And in too many parts of the country housing has been a Ponzi scheme.