Posted Dec 23, 2008 03:21pm EST by Aaron Task
Hopes that low mortgage rates will solve the housing crisis took another blow today on news of weaker-than-expected sales of both new and existing homes for November.
Here are the lowlights:
- Existing home sales tumbled 8.6% from October (which was revised down) and 10.6% from a year ago to an annualized rate of 4.49 million vs. the expected 4.93 million.
- Foreclosures and/or short sales accounted for approximately 45% of total sales.
- Average prices fell 13.2%, the biggest drop on record, to $181,300 and declines were evident in every region of the country.
- The inventory of unsold existing homes rose to 11.2 months supply from 10.3 months in October.
- New home sales fell 2.9% from the prior month but down more than 35% from a year ago to an annualized rate of 407,000, the weakest since 1991 and below the expected rate of 415,000. Average prices fell 11.5% to just over $220,000.
About the only positive data point from this morning’s data is that the inventory of unsold new homes dipped to 11.5 months supply. Still, there is nearly a year’s worth supply of new and exiting homes on the market.
With 30-year fixed mortgage rates available at 5% or lower for qualified buyers, the government has already done a lot to help buoy housing, even as homebuilder CEOs like Ara Hovnanian and Bob Toll lobby for more government intervention.
The issue is not the cost of borrowing, which is only half the battle, as discussed here.
A bigger issue is the fact potential buyers are (understandably) in no hurry, given rising unemployment, general economic malaises and a sense the longer they wait, they lower prices will go. At this juncture, it does not look like there’s any “bottom” for housing anytime soon.