News Article From: 10-26-2006
The first article, Existing home sales keep falling, from MSNBC.com, reports that in further evidence of a sharp slowdown in the once-booming housing market, sales of existing homes nationwide fell for the sixth straight month in September and the median price dropped by a record amount. Sales fell by 1.9 percent in September and the median price of a single-family home fell to $219,800, a drop of 2.5 percent from the price in September 2005, according to the National Association of Realtors. "The worst is behind us as far as a market correction-- this is likely the trough for sales," said David Lereah, NAR's chief economist. "When consumers recognize that home sales are stabilizing, we'll see buyers who've been on the sidelines get back into the market," he added. Other economists are not as optimistic. "The housing slowdown is just over a year old. It probably has another year to run," said Patrick Newport, U.S. economist at Global Insight. "The market will probably not turn around until at least the second half of 2007."
The second article, Is housing out of the woods?, from MSNBC.com, reports that a recent stream of encouraging data has some prominent economist changing their tune about the housing market. One of the first was Alan Greenspan, who said on October 7th that "the worst may well be over." A growing number of economist and analysts have come around to the ex-Fed chief's view. "The point of maximum deterioration in housing activity has probably passed," says Jan Hatzius, chief economist at Goldman Sachs. Others maintain that the housing downturn still has a long way to go. In an Oct. 9th speech, San Francisco Fed President Janet Yellen painted a gloomy picture. Yellen spoke of a major homebuilder who calls Phoenix and Las Vegas "the new ghost towns of the West." According to Yellen, price cuts "appear inevitable." Others are taking more of a middle of the road approach, saying that while the housing slowdown has a way to go, the declines may be fading somewhat.
The third article, Cooldown catching up with builders, from the Arizona Republic, reports that homebuilders revenues and profits are down, and slower sales and cancelled deals are pressuring builders to start layoffs and unloading or revaluing land they bought in the housing boom. Pulte said Wednesday that third-quarter income fell by more than 50 percent. Meritage Homes cancellation rate hit an all-time high at 37 percent. The latest new-home data from analyst RL Brown shows a market seeking, but not yet finding a bottom. "We're bumping along the bottom," he said. "The builders are kicking it in the tail, marketing their inventory. When you cut a $195,000 house down to $118,500, that attracts buyers. That will move inventory out, and the permits will come up as builders need to start producing again."