Home Sales Drop 8.3 Percent
Sep 28th, 2007 @ 7:40 AM by Alden Smith
Reporting on the market and everything that affects it can be a daunting task. There has been so much doom and gloom in the market this year that it sometimes feels as if I am being negative and reporting what I see as the “bad” things in the mortgage market. However, this isn’t true. I report what I learn on a daily basis, and make every attempt to give a clear overview of what is happening. It is the only way a person considering securing a mortgage loan can make an informed decision. I have to call them like I see them.
The Decline in Sales
KB Sales, one of the nation’s largest builders, reports that new home sales in August fell 8.3 percent from the previous month to the lowest level in seven years. KB Home reported a loss of $35.6 million, or 46 cents per share, for the quarter ended Aug. 31, compared with a profit of $153.2 million, or $1.90 per share, in the year-ago period. Jeffrey Mezger, KB’s president and chief executive officer said “We expect housing industry conditions to continue to worsen through the end of the year and into 2008.” KB sales is one of the first home builders to be listed on the New York Stock Exchange.
The NBC Nightly News with Brian Williams reported that nation wide sales are down 21%, with sales in the northeast down 14%, 11% in the midwest, 30% in the south, and 16% in the west. Home builders, such as Hovnanian, have had 3 day sales over past weekends that dropped prices up to $100,000 .
The Current Condition of the Market
The NBC report also stated that home sales are down 7.5% from last year. This is the biggest drop in 40 years, and it is expected to drop further in the next year. The National Association of Realtors report that existing home sales are down as much as 13%, which is the lowest since the Great Depression.
Where’s The Money?
The nation has buyers. Around 15-20% of people that are looking to secure a loan right now are unable to do so because of the housing crunch and the subsequent fallout of the sub-prime market. Banks, mortgage lenders and investors are wary because of all the turmoil in the market at present. Even with the Fed relaxing the rate to 4.75% has had little effect thus far. This move by the Fed will take time to trickle down to the people that are wishing to buy. Fallout from this market issue is expected to last well into 2008.
What’s The Cure?
This whole scenario will not play itself out until unethical and predatory lenders are brought to task. As long as lenders make questionable loans, the problem will continue to haunt us. Everything is being done now to ease this issue, but it has been a long time coming, and will not go away soon. In the interim, all a person can do is hold tight and let the debacle play itself out. There is little else that can be done.