Mortgage & Loan: Are Home Sales Better Or Worse?

Today stats from the Commerce Department further bore out the reality that home prices are tanking, and that the end may not be as close in sight as we thought:

The Commerce Department reported that the median price for a new home sold in September was $217,100, a drop of 9.7 percent from September 2005. It was the lowest median price for a new home since September 2004 and the sharpest year-over-year decline since December 1970. The weakness in new home prices was even sharper than a 2.5 percent fall in the price of existing homes last month, which had been the biggest drop on record.

And yet...

The price decline for new homes came while the sales pace picked up, rising by 5.3 percent to a seasonally adjusted annual rate 1.075 million homes. It marked the second consecutive increase in sales following three months of declines. (Emphases added.)

USA Today also reports that sales of 30-year fixed-payment mortgages are on the rise as well.

Seems like a simple equation, doesn't it? Drop the prices to reasonable levels, and the buyers will come back. And--wonder of wonders--the traditional fixed mortgage is still the best value for your money. Who would have thought it?

It's worth noting that CNN Money has listings of the top 10 places to buy--and to NOT buy. The "Not Buy" column is full of textbook bubblicious areas that saw huge gains thanks to excessive speculation and toxic mortgage proliferation. I have no doubt that D.C. will weather the storm, but as for Bakersfield and Fresno, I wouldn't put money on it--or Vegas either. :)

Posted at October 26, 2006 03:26 PM

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Today stats from the Commerce Department further bore out the reality that home prices are tanking, and that the end may not be as close in sight as we thought: The Commerce Department reported that the median price for a new home sold in September was $217,100, a drop of 9.7 percent from September 2005. It was the lowest median price for a new home since September 2004 and the sharpest year-over-year decline since December 1970. The weakness in new home prices was even sharper than a 2.5 percent fall in the price of existing homes last month, which had been the biggest drop on record. And yet... The price decline for new homes came while the sales pace picked up, rising by 5.3 percent to a seasonally adjusted annual rate 1.075 million homes. It marked the second consecutive increase in sales following three months of declines. (Emphases added.) USA Today also reports that sales of 30-year fixed-payment mortgages are on the rise as well. Seems like a simple equation, doesn't it? Drop the prices to reasonable levels, and the buyers will come back. And--wonder of wonders--the traditional fixed mortgage is still the best value for your money. Who would have thought it? It's worth noting that CNN Money has listings of the top 10 places to buy--and to NOT buy. The "Not Buy" column is full of textbook bubblicious areas that saw huge gains thanks to excessive speculation and toxic mortgage proliferation. I have no doubt that D.C. will weather the storm, but as for Bakersfield and Fresno, I wouldn't put money on it--or Vegas either. :)