Sales of existing homes plunged by a record amount in September as turmoil in mortgage markets added more problems to a housing industry in its worst slump in 16 years. The National Association of Realtors reported Wednesday that sales of existing homes fell 8 percent in September, the largest decline to show up in records dating to 1999. The seasonally adjusted annual sales rate of 5.04 million existing homes was also the slowest pace on record.
Analysts blamed the bigger-than-expected slump on the turmoil that hit credit markets and mortgage markets in August as worries increased over rising mortgage foreclosures. Those worries resulted in a drying up of the availability of so-called jumbo mortgages, loans over $417,000, which are particularly important in high-cost areas such as California. AP
Inventories of unsold homes rose to 4.4 million units for the month of September, which, if sold at their current pace, would take 10 1/2 months to sell, which is another record. As inventories of homes climb and people begin to get more and more nervous about the housing market, prices will likely begin to come down further.
We’re on a momentum train right now, and it is heading in the wrong direction! While this provides plenty of opportunity for those people who are savvy investors, the average Joe is really starting to feel the pressure from the marketplace. Additionally, as I’ve said many times before, this will continue to pressure the rest of the economy, and is likely to help put us right in the middle of an ugly recession.
We’ll be here to let you know about any further developments in the housing market and how these things can affect you.