Tuesday, June 27, 2006
Dick Cheney Says "Budget Deficits Don't Matter"; I Say He's Full of Shit.
As interest rates rise, home sales slow for example.... See how much fun it is to live under a Republican administration? You're getting screwed and you don't even know it......
Sales of existing homes fall
May weakness led by a big drop in demand in the Northeast
MSNBC News Services
June 27, 2006
WASHINGTON - Sales of existing homes in May fell for the third time in the past five months, with the weakness led by a big drop in demand in the Northeast.
The National Association of Realtors reported Tuesday that sales of previously owned homes dropped by 1.2 percent in May to a seasonally adjusted annual rate of 6.67 million units.
The median price of the homes sold in May rose to $230,000 in May, up 6 percent from the same month a year ago. That represented a slowdown from huge double-digit price gains last year at the peak of the housing boom.
Consumer credit concerns
In another signal of economic sluggishness, late credit card payments rose in the first quarter of this, according to the American Bankers Association, as high gas prices were seen putting pressure on family budgets.
In the housing report, sales fell by the largest amount in the Northeast, a drop of 4.2 percent. Sales were down 3.8 percent in the Midwest.
Sales of existing homes managed to post small gains of 0.7 percent in the West and 0.4 percent in the South.
Analysts said this is a classic pattern for a cooling housing market with sales starting to lag under the impact of rising mortgage rates.
David Lereah, chief economist for the Realtors, said he expected sales to fall by 6.8 percent from last year’s record pace. Sales had surged to record levels for five consecutive years as buyers responded to the lowest mortgage rates in four decades.
But with mortgage rates climbing steadily under the impact of credit tightening by the Federal Reserve, analysts look for housing to slow this year but not to crash.
The Realtors report showed that the number of homes still on the market at the end of May climbed to an all-time high for the month of 3.6 million units. The number of months it would take to exhaust that inventory level at the May sales pace would be 6.5 months, the highest level since May 1997.
Analysts said they believed that home sellers in many parts of the country will soon start to trim their asking prices in response to the rising level of unsold homes. That will help to boost sales.
Lereah said he expected a housing slowdown but not a housing collapse as a strong economy keeps demand for homes at a solid level.
“Right now we are on course for a soft-landing in housing,” he said.
He said that 30-year mortgages, which are currently at 6.71 percent, could climb to 7 percent by the end of the year or even higher if the Fed goes farther in boosting interest rates than is currently expected.
Fed officials are expected to increase a key rate for a 17th time when they meet on Wednesday and Thursday.