Americans Afraid to Buy HomesMaya Roney
This morning, the NAR said existing-home sales “remained essentially unchanged” in May as they slipped 0.3% to an annual rate of 5.99 million units. Sales jumped 5.8% in the Northeast and 0.7% in the Midwest, so it looks like the West (down 0.8%) and the South (down 3.4%) are the biggest losers.
NAR senior economist Lawrence Yun said “psychological factors” are currently the biggest drag on housing, with tighter credit for subprime borrowers coming in a close second. Rather than take the plunge into this uncertain market, “many people are doubling-up—they’re adding roommates or moving in with parents,” he said. Yikes!
But the market is underperforming, Yun said, given strength in job creation, economic growth and relatively low (but…watch out…rising) mortgage interest rates.
Patrick Newport, an economist with Global Insight, said he now does not expect home sales to turn around until “at least the middle of next year,” citing last week’s near collapse of two Bear Stearns hedge funds invested heavily in subprime loans. “Lenders are likely to respond to the latest developments in the subprime market by further tightening credit.” Newport said.
In other news, inventories were up to a supply of 8.7 months in May— the highest reading since June 1992. At $223,700, the median price of a single-family home was 2.4% lower than it was last year. I wonder if most homeowners still think they could sell their home for more money than they could have a year ago…
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