Housing sales in July plunged 25.5 percent below the level of a year ago, the National Association of Realtors said on Tuesday, as buyers lost the spur of a government tax credit. The steep descent surprised nearly every analyst and put the volume of single-family home sales at the lowest level since 1995.
via Home Sales Fell 25.5% in July, Renewing Economic Anxiety – NYTimes.com.
The big question now is what to do about the lagging housing market. The interest rates are very low. Still the demand for new and existing housing is down. The tax credit of $8,000.00 ended on June 30, 2010 which many speculate caused more homes to close then hindering July sales.
Fed Chaiman Ben Bernanke is expected to offer comments on Friday which may provide some indication of contemplated Fed action. Do they have any bullets left? Some are asking the question as reports of conflict among Fed Governors have been reported this week.
In Alabama the decline in July sales matched the national experience. Just this week I heard about a gentlemen who was intending to build a million dollar home in the Montgomery area. He was putting $600,000 into the deal. He had excellent credit and reportedly could not get financing for the balance of $400,000. If this is a true story, it really means we have a dysfunctional banking system. Surely, this is not the case. The problem of homeowners underwater with property worth less than their existing loans is not going away. The financial emergency is extending heavily into commercial properties too. With mortgage forclosures increasing in both categories and continue high unemployment, it will take some very focused action by the powers that be to avoid deflation.
With politics at its worse, the would be leaders if you can call them that are aimless and clueless. Can the Fed do it by themselves? I sure don’t know but I am having a problem thinking so.
