Entries for March 2008

This week's average interest rate on a 30-year fixed-rate mortgage fell slightly, to 5.85 percent, from an average of 5.87 percent last week, according to Freddie Mac's survey.

"Long-term mortgage rates were mixed but relatively unchanged in the past week, as the latest economic indicators came in much as expected," Frank Nothaft, Freddie Mac vice president and chief economist, said in a press release. "For instance, the index of leading indicators continued to fall for the fifth straight month while consumer confidence reached a five-year low."

The news release is here.

You can see historical data here.

As lawmakers and administration officials wrestle over just how involved the federal government should become in the housing crisis, one big city, Philadelphia, is diving right in:

From the Philadelphia Inquirer:

With housing advocates predicting that the subprime mortgage crisis will hit the city hard in 2008, Sheriff John D. Green yesterday suspended sales of foreclosed properties for April and said he would seek court approval for an even longer moratorium.

His announcement came about 30 minutes after City Council unanimously passed a resolution calling on him to freeze sheriff's sales.

The full article is here.

Frank Nothaft, the chief economist of housing finance giant Freddie Mac, said in a speech Thursday that it could be the turn of the next decade before home prices recover.

"I don't think we're going to see any improvement in the national house-price matrix until 2010," Nothaft said, according to McClatchy Newspapers.

While recent reports on the national housing market have contained a glimmer of hope—albeit a tiny one—the real estate situation in California appears to be bleak and getting bleaker.

From the Los Angeles Times:

Statewide, median sales prices fell by a stunning 26% from year-ago levels in February, with home prices dropping at a rate of nearly $3,000 a week, the California Association of Realtors reports. Further, the CAR says the Fed's interest rate-cutting campaign "will have little near-term direct effect on the housing market."

That's right, home prices in California are plummeting at a rate of $2,788 per week—well above the already scary national rate of $338 a week.

The full article is here.

Lennar, one of the country's leading homebuilders, reported a first-quarter net loss of $88.2 million, after turning a $68.6 million profit in the same period last year. The results were not nearly as bad as some had expected, sending the company's shares more than 4 percent higher in late-afternoon trading.

The earnings report is here.

Sales of new homes fell by 1.8 percent in February, from January, to levels not seen since 1995, according to a government report released this morning. The full report is here.

Here's the good news: "The rate of decline appears to be slowing after the plunge last fall," says Ian Shepherdson, the chief U.S. economist of High Frequency Economics. "There have been false dawns before, so it would be unwise to call the bottom at this point, but the leveling off in the [National Association of Home Builders] survey is consistent with this idea."

Still, Shepherdson warns the coast is certainly not clear yet:

The fly in the ointment though is the still-huge inventory overhang which, at 9.8 months, is enough to keep downward pressure on prices for the foreseeable future. The risk is that the bargain-hunters now in the market will get badly burned, sparking another downward lurch in sales from current levels.

By adjusting the S&P/Case-Shiller home-price indices—which were released Tuesday—for inflation, financial bloggers at the site Calculated Risk suggest that home values may be years away from a nadir.

Look at the length of the housing bust in the early '90s. It took over six years from peak to trough in some cities. If this bust takes the same amount of time, prices will not bottom in some cities until 2012 (or there about).

You can check out the chart here.