We have record low mortgage interest rates. We have home prices off 30% from their highs in 2006. We’re in peak home buying season. And yet home sales keep falling month after month.
We’re headed for the worst year in home sales in 50 years since these stats started getting compiled.
What is preventing people from buying homes? The expectation that prices will fall more in the next year. Many people don’t have jobs or full-time work, so this prevents them from buying. And tough new mortgage lending standards exclude many who would’ve qualified for such mortgages prior to 2007.
The AP says: Sales of new homes fell to a six-month low in August. The fourth straight monthly decline during the peak buying season suggests the housing market is years away from a recovery.
The Commerce Department said Monday that new-home sales fell 2.3 percent to a seasonally adjusted annual rate of 295,000. That’s less than half the roughly 700,000 that economists say must be sold to sustain a healthy housing market.