Recent housing reports are not overwhelming
June 24, 2009 by admin
The long climb up out of the housing bottom hole will take a good deal of time. This week the existing and new home sales reports for the month of May were released and both reports indicated a continued weakness in the market. The existing home sales report, released from the National Association of Realtors, indicated home sales edging up about 3% for the month of May. The new home sales report for the month of May fell approximately .6% for the same period.
The housing market is continuing to struggle to find a bottom. The market which has been hit hard with home foreclosures and job losses, was optimistic that the governments tax rebates, combined with historically low mortgage rates would bring more buyers into the market. The stock market, which appears to have bottomed out in March, has provided some optimism that the economic slow down would begin to ease in 2009 has also failed to inspire home buyers. The only properties that appear to be selling aggressively are bank owned homes and foreclosed properties. Home values have declined in excess of 15% nationally and the median sales price is now well below $200,000.
Foreclosed properties appear to be the markets Achilles heal. As these distressed properties pile up, they continue to pressure the broader real estate market to lower sales prices. The housing market has noticed a large increase in the number of home buyers who simply are walking away from their existing properties, and sending their keys back to their mortgage lenders.
The government rolled out a loan modification and refinance program aimed at reducing bank foreclosures earlier this year. The effectiveness of these programs is hard to gauge, but has done little in the short term to reduce foreclosures and provide needed stability. Mortgage rates have moved higher in May and June and could provide additional downward pricing pressure on the housing markets. The Obama administration will closely follow the housing news and could push for the tax rebate to be extended for another one or two years, as it appears a recovery for housing is a minimum of twelve months away based on the current sale levels.