The Associated Press is reporting interesting data regarding the housing market. Does it point to an impending meltdown? You decide:
“the U.S. Commerce Department reported Thursday that new home sales fell by 4.3 per cent last month to a seasonally adjusted annual sales pace of 1.072 million units. The decline was the largest since an 11.5 per cent plunge in February.”
“Builders are offering many extras to entice buyers,” said Peter Morici, a professor at the University of Maryland’s business school. “Overall, values are falling and builders’ profits are threatened.”
“Analysts expect home sales to drop by some 10 per cent this year.”
The question is, what does all of this mean for buyers and sellers? Prices look like they are going to decline, as demand weakens. Foreclosures will continue to rise, and the housing market will continue to transform into a buyers market after a five year sellers market.
CNN Reports: “The median price of a new home came in at $230,000 in the latest report, essentially flat to the year earlier price levels and down 1.6 percent from the June reading. Median price is the point at which equal numbers of homes sell for more and less.”
“We’ve got a situation where supply is growing significantly faster than demand,” said Paul Kasriel, chief economist for Northern Trust in Chicago. “That means prices are going to need to come down. I think it’s going to take at least a couple of years to work out this imbalance, and after that I suspect that the market may go sideways for some time.”