Economy Can Strengthen Only When Housing Prices Do
June 25 2009 - The U.S. economy won’t regain its strength until the price of houses stops falling. And that day hasn’t yet arrived.
“The crisis cannot end fully until home prices in the U.S. are at least stabilizing,” says Alan Greenspan, who continues to dissect housing data with as much interest as he did when he was Federal Reserve chairman.
For the two-thirds of American families who own their homes, a house is their biggest asset. The lower house prices go, the less wealthy they are and the less they can or will spend and borrow. For home builders, the lower home prices go, the fewer new homes they will build and the fewer workers they will hire. And for many American banks and other financial institutions, mortgages, mortgage-backed securities and financial instruments that rest on mortgages remain a huge headache. The lower house prices go, the less these loans and investments are worth and the weaker the foundations of the financial system are.
Although sales of houses seem to be perking up, a good sign, home prices aren’t. The National Association of Realtors said this week that the median sale price of an existing single-family home in May — $172,900 — was 16.1% lower than a year ago. Prices of newly built homes in May were off 3.4% from a year earlier, the government estimated Wednesday.
More sophisticated, though not as timely, measures that compare prices of the same houses when they are resold show similar trends. The S&P/Case-Shiller indexes for 10 and 20 big metro markets are still falling. The latest readings show a nearly 19% decline between March 2008 and March 2009. The Federal Housing Finance Agency, which tracks only home sales with mortgages sold or backed by Fannie Mae or Freddie Mac, said prices in April were down 6.8% year over year.
Economy Can Strengthen Only When Housing Prices Do
Homebuilder Lennar Q2 2009 Revenue Exceeds Estimates
Mortgage Applications Increase week ending June 19 2009
© relistr.com privacy policy