Anyone who reads the papers or visits news sites on the internet knows that sales of new homes dropped 11.2% in January to a seasonally adjusted annual rate of 309,000. This figure is said to be the lowest level since 1942 by some analysts and the lowest level in 50 years by others.
Economists tried to explain the numbers away and some of their arguments were persuasive. Bad weather kept people from house hunting. If that is so, the figures should pick up in the spring. But, they won't, at least not by very much.
Recent data from the Mortgage Bankers Association, the government, and other sources show that the default rates and foreclosures on homes are continuing to rise. More than eleven million people now live in houses which have underwater mortgages. Most of these problem loans are in the states where home prices have fallen the most, states which include Michigan, Nevada, California, and Nevada. As foreclosures on underwater mortgages in these states fall, so will home prices.
People are not aggressively shopping for homes because home prices are continuing to fall and default rates and foreclosures are likely to make that problem worse as the year wears on.
rest at http://www.noonehastodietomorrow.com/agenda/economy/2034?task=view
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