The bitter winter chilled demand for newly built homes, causing new home sales to sink like a stone. The already struggling housing market received another blow, as new home sales dropped by almost 17 %. Skittish lending conditions are given partial credit. Overall conditions have not been very conducive to recovery in the housing market.
Less individuals considering new houses
A decrease in the sale and construction of new homes in the last few months has appeared. Reuters attributes this to the cold weather, less of a demand and the issues with foreclosures.
In February, there was a 27 percent decrease in new housing starts. There was a decrease in the annual rate of sales of new homes from 300,000 to 250,000. From January to February, there was a 16.9 percent decrease in new home sales. There was a 28 percent decrease in new home sales since February 2010. That year's data shows those figures.
The delay in construction most likely did have to do with winder conditions. Nevertheless, the decrease in existing home sales was likely as a result of weak demand. Nobody wants homes while banks have to lend to make it take place. Banks may be unwilling to write installment loans for these homes.
Head real estate economist blasts sluggish lending
The NAR site showed that chief economist for the National Association of Realtors, Lawrence Yun, said that if "mortgage credit conditions would return to normal," the sales would go up which is the issue with "unnecessarily tight credit" and loan companies.
Ron Phipps, president of the NAR, echoed Yun by saying that though rates of interest for mortgages were certainly lower than several short term loans, lamenting that "credit remains a challenge.". Purchasing a new home is something hard to justify. This is especially true when the home costs are low nevertheless and not going up. There was a median price for existing homes of $156,100 at the end of February. This compares to the new home median price of $202,100.
Glut of foreclosures
The housing market is currently riddled with foreclosed properties, and the rich are having a field day gobbling them up. Cash sales made up 33 percent of all home sales in February, and 39 percent of all homes sold were distressed properties, in accordance with Bloomberg.
The future of housing does not look good, in accordance with Federal Reserve Chairman Ben Bernanke. He said that mortgages were "difficult to obtain" and "there's no demand for construction" right now.
Purchasing a house is only something few will be able to do. This is for everyone with credit or money to do so. However, those that try to become homeowners will likely have a difficult time. Until credit gets better, more than likely the housing industry will struggle.
Information from
Reuters
reuters.com/article/2011/03/23/us-usa-economy-housing-idUSTRE72F3XG20110323?pageNumber=1
Bloomberg
bloomberg.com/news/2011-03-21/u-s-february-existing-home-sales-fall-to-4-88-million-rate.html
National Association of Realtors
realtor.org/press_room/news_releases/2011/03/feb_decline
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