Despite a slight uptick in the sales of new homes, there is new evidence that the U.S. housing slump will not end anytime soon.
Yesterday the Standard & Poor’s/Case-Shiller Index showed that national home prices fell 14.1 percent in the first quarter compared with a year earlier, the lowest since its inception in 1988.
And even though the sales of new homes were up slightly in April, they remained near their lowest levels since 1991.
New home sales were up 3.3 percent from March, but were down a stunning 42 percent from a year ago.
April’s new home sales were the second-lowest since October 1991, behind only March of this year.
The National Association of Realtors, in its typically disingenuous fashion, spins these bleak figures as an “easing” of home sales.
According to the New York Times, “Even markets that once seemed immune to the slump, like Seattle, are weakening. Prices nationwide might fall as much as 10 percent more before a recovery takes hold, economists said. As the home-buying season enters what is traditionally its busiest period, there are simply too many homes in many parts of the country, and too few people with the means to buy them. The situation is likely to get worse because a rising tide of foreclosures is flooding the market with even more homes, while a slack economy and tight mortgage market are reducing the pool of potential buyers.”
Those who can hold on to their properties are not selling at current prices and those who can buy are waiting for prices to fall still lower.
And they will get lower.
With more than 4.5 million homes on the market, and with a rising tide of foreclosures that continues to add dramatically to that figure, prices are certain to continue to fall even further.
There is plenty of money waiting for prices to stabilize, but that won’t happen for quite a while.
First, something must be done to stop the flood of foreclosures that are adding to the nation’s already overloaded housing supply.
Second, the banks and lenders must respond to the Federal Reserve’s lowering of interest rates by passing these lower rates on to more borrowers.
Our guess is that little or nothing will happen on these fronts until after the presidential election.
Meanwhile, the meltdown continues.