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…
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.