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U.S. Housing Market Continues To Slow Down

by @ 11:25 am on April 24, 2007. Filed under Economics, Real Estate, Sub-Prime Mortgage Crisis

March was another bad month for the U.S. Housing market as sales of existing homes plunged yet again:

WASHINGTON — Sales of existing homes plunged in March by the largest amount in nearly two decades, reflecting bad weather and increasing problems in the subprime mortgage market, a real estate trade group reported Tuesday.

The National Association of Realtors reported that sales of existing homes fell by 8.4 percent in March, compared to February. It was the biggest one-month decline since a 12.6 percent drop in January 1989, another period of recession conditions in housing. The drop left sales in March at a seasonally adjusted annual rate of 6.12 million units, the slowest pace since June 2003.

The steep sales decline was accompanied by an eighth straight fall in median home prices, the longest such period of falling prices on record. The median price fell to $217,000, a drop of 0.3 percent from the price a year ago.

The fall in sales in March was bigger than had been expected and it dashed hopes that housing was beginning to mount a recovery after last year’s big slump. That slowdown occurred after five years in which sales of both existing and new homes had set records.

David Lereah, chief economist at the Realtors, attributed the big drop in part to bad weather in February, which discouraged shoppers and meant that sales that closed in March would be lower. Existing home sales are counted when the sales are closed.

Lereah said that the troubles in mortgage lending were also playing a significant part in depressing sales. Lenders have tightened standards with the rising delinquencies in mortgages especially in the subprime market, where borrowers with weak credit histories obtained their loans.

Meaning that this is likely to continue for awhile longer.

2 Responses to “U.S. Housing Market Continues To Slow Down”

  1. Continue? But I thought that when they said home sales jumped in February that it was over, and maybe we’d hit bottom? Are you trying to tell me that the financial news media might not have been correct?!

    [/sarcasm]

    Yeah, this one’s going to keep dropping for a while. It’s going to widen, too. Expect a recession by year’s end.

  2. [...] how to reconcile this report with yesterday’s reported drop in sales of existing homes [...]

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