Talk up the economy as much as you want, the facts show otherwise.
In the housing sector, the one that seems to have been the springboard to our recession, things keep getting worse. This morning the newspaper announces that Crye-Leike, one of our biggest realtors, is closing its office in Midtown “because of slumping sales.” At 9 a.m. the existing home sales number came out. It was a puny 4.81 million and reinforces Crye-Leike’s decision.
Stuart Varney on Fox Business explained it this way, “that means in this calendar year, given last month’s selling pace, 4.81 million homes will be sold in America. That is a very low number. That’s down 3.8% month to month. In 2005 we sold more than 7 million homes in the United States. This year we’re down to 4.81 million. That is a bad number.”
In April the number was at 5.05 million. “We are not buying homes even though we have extremely low mortgage rates and extremely low prices that are still falling,” Varney said.
Experts say the government is abetting falling home prices through the tax credit which “just pulled buying forward” and the financial regulations which are encouraging low appraisals. This means that people are wary of buying a home today that might cost less tomorrow. “Why would I buy a home for $100,000 and put a down payment of $20,000 if six months from now the thing is worth $80,000 and I’ve lost my $20,000 down payment?” Varney explained.
Zero Hedge blog notes “Total housing inventory at the end of May fell 1.0% to 3.72 million existing homes available for sale which represents a 9.3 month supply at the current sales pace, up from a 9 month supply in April.” The National Association of Realtors blames the dip on spiking gas prices and severe weather. When all else fails, blame the weather, eh?
Core Logic finds that 22.7% of homes have negativity equity. In other words, 23% of mortgages are under water.
Until this situation stabilizes, the whole economy is in trouble.