Several articles on the housing market came out in the last week of August.
Housing Slump Proves Painful For Some Owners and Builders
'Hard Landing' on the Coasts Jolts Those Who Must Sell; Ms. Guth Tries an Auction 'We're Preparing for the Worst'
August 23, 2006
HERNDON, Va. -- For years, real-estate brokers and home builders promised that the soaring property market eventually would glide to a soft landing. These optimists predicted that home prices, which had more than doubled in parts of the country between 2000 and 2005, would continue to rise, but at a more normal pace of 5% or 6% a year.
It isn't working out that way. The rapid deterioration of the market over the past 12 months has caught many homeowners and builders off guard. Some are being forced to cut prices far below what their homes could have fetched a year ago. It's too early to say how hard the landing will be, but at a minimum it will be bumpy for many people who need to sell homes. And the economy as a whole, buoyed in recent years by the housing frenzy, could suffer.
The pain that homeowners and home builders are now feeling follows a raging national house party. As Americans soured on the stock market after the tech bubble burst in 2000, they poured money into real estate, spurred on by the lowest interest rates in four decades and looser lending standards. Surging demand created home shortages in California, Florida and the Northeast. Over the five years ending Dec. 31, average U.S. home prices jumped by 58%, according to a federal housing index.
In much of the country, property markets began cooling rapidly in the second half of last year. Home builders were still turning out houses at a rapid clip, and the surge of new and previously occupied homes on the market convinced buyers there was no need to hurry. Over the past year, the number of previously occupied homes listed for sale nationwide has risen nearly 40%. In some metropolitan areas, including Orlando and Phoenix, the supply has quadrupled.The resulting slump, thus far, is being felt mainly on the East and West coasts and in Florida, where home prices had soared beyond the average working family's ability to pay. In California's San Diego County, the median home-sale price was $487,000 in July, down 1.8% from a year earlier, according to DataQuick Information Systems, a research firm in San Diego. Prices in the Northern Virginia counties of Fairfax and Arlington and in nearby towns, near Washington, averaged $537,731 in July, down 3.9% from a year earlier, according to the Northern Virginia Association of Realtors.
In some other parts of the country, notably Texas and the Seattle area, local housing markets remain robust. Texas' low housing costs are attracting new residents and investors, while Seattle's strong job market and shortage of homes have kept prices rising.
New-Home Sales Decline by 4.3%
Higher Inventory Suggests Downturn Is Deepening; Mixed Durable-Goods Data
The Commerce Department said sales of new homes in July fell 4.3% from June to a rate of 1.07 million units, a pace that is 21.6% slower than a year ago. The inventory of unsold homes on the market rose to a supply of 6.5 months, up from 4.2 months a year earlier, while the median price fell to $230,000 in July and is essentially flat compared with a year ago.
Those numbers suggest the downturn in the housing market is deepening and will continue to weigh on the economy. But a separate report from the Commerce Department on the manufacturing sector suggests businesses and consumers are still spending enough to produce modest economic growth.
Sales of Existing Homes Fall 4.1%
South Feels Less of a Pinch As Slump Slams Rest of U.S.; Inventory Climbs to Record
August 24, 2006
Nationwide, the median sales price for existing homes was $230,000 last month, up 0.9% from last year.
Existing-home sales last month fell 4.1% from June to an annual pace of 6.33 million units, a rate 11.2% lower than a year earlier. By region, in contrast to the South, the pace of sales compared with year-earlier results fell 18% in the West, 12.5% in the Northeast and 10.1% in the Midwest.
The inventory of unsold homes nationwide rose 3.2% to a record 3.85 million, a 7.3-month supply at the July sales rate.
