Daily News and Information for the Mortgage Loan Originator
New-Home Sales Down 3.9 Percent
Monday, March 26, 2007
-
WASHINGTON, D.C. - Sales of new single-family homes fell 3.9 percent in February to a seasonally adjusted annual rate of 848,000, the lowest level since August of 2000, according to figures released by the U.S. Commerce Department. The February fall-off followed downward revisions to the sales rates for the three previous months.
“The decline in home sales reflects what builders are telling us,” said Brian Catalde, president of the National Association of Home Builders (NAHB) and a home builder from Playa del Rey, Calif. “Our recent builder surveys show a decline in builder sentiment in early March, associated with serious concerns about how the subprime-related shakeout in the mortgage market will affect the housing sector. Today’s numbers suggest we are already seeing serious effects on the lending side.”
“Lending standards apparently are tightening not only in the subprime market but in other components of mortgage lending as well, and this is creating tremendous uncertainties regarding the near-term outlook for home sales and housing production,” said NAHB Chief Economist David Seiders. “The Federal Reserve’s recent statement that there is an ongoing adjustment in the housing sector appears right on target.”
Seiders added that the decline in new-home sales is troubling particularly in view of supportive economic fundamentals – job growth and household income are solid and the interest rate structure remains quite favorable. Furthermore, the weakening is occurring despite improving affordability conditions in the marketplace, improvements in consumers’ assessments of home buying conditions, and ongoing efforts by builders to reduce inventories by cutting prices and offering other sales incentives.
“While there was some weather-related impact on both the January and February sales numbers, it is obvious that the weakness is more fundamental, and this apparently can be traced to the mortgage market,” said Seiders. “Housing is a credit-dependent sector and a broad-based tightening of mortgage lending standards certainly does not bode well for families seeking to buy homes.”
Three out of four regions posted declines in new-home sales in February. Sales were down 26.8 percent in the Northeast, 20 percent in the Midwest and 7 percent in the South. Seiders noted that the 24.6 percent gain in the West is largely attributable to an unusually low reading in January.
Related
Articles :
New Home Sales Rise 3.4 Percent The U.S. Commerce Department reported that sales of newly built, single-family homes rose 3.4 percent to a seasonally adjusted annual rate of 1.05 million units in November. Sales also were revised upward for the three previous months.
Builder Confidence Slips In March Builder confidence in the market for new single-family homes receded in March, largely on concerns about deepening problems in the subprime mortgage arena, according to the National Association of Home Builders/Wells Fargo Housing Market Index, recently released.
National Home Values Fall For 7th Straight Month The National Association of Realtors released their existing home sales report today. The report indicated that although existing Single-family home sales rose 3.7 percent from the month prior, existing home sales are still off 3.4 percent from one year earlier. The report also indicated that home values fell 1.5 percent from just one year earlier, which marks the 7th straight month that home values declined.
Pending Home Sales Show Effects of Weather, Possible Subprime Impact A forward-looking index based on pending home sales indicates that bad weather, and possibly the loss of some subprime lending, will dampen sales closed in March and April, according to the National Association of Realtors.
