Homes Sales posted sharpest drop in 18 years in March!
As reported on CNNMoney.com, Home sales posted their sharpest drop in 18 years in March, a real group said Tuesday, as problems in the subprime mortgage sector pushed sales well below what economists had forecast. For you local Indianapolis area homeowners, as reported by the Metropolitan Board of Realtors, the average sale price fell from $152,300 to $147,700 from Mar 06 to Mar 07 and dollar volume dropped from $417,600 to $316,900 in the same time period.
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Derek Gutting, The Gutting Group, Keller Williams Realty 877-288-7355.
Sales of existing homes fell 8.4 percent to an annual rate of 6.12 million in March from February's 6.68 million rate, the National Association of Realtors said. It was the biggest one-month drop since January 1989. Economists surveyed by Briefing.com had forecast sales would fall to an annual rate of 6.45 million in March.
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| Home sales and prices both fell in March, according to the National Association of Realtors report. |
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Current Mortgage Rates
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| Type | Overall avgs |
|---|---|
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| 30 yr fixed mtg | 5.76% |
| 15 yr fixed mtg | 5.49% |
| 30 yr fixed jumbo mtg | 6.11% |
| 5/1 ARM | 5.51% |
| 5/1 jumbo ARM | 5.75% |
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David Lereah, the Realtors' chief economist, said that bad weather earlier in the year may have cut down on sales that closed in March. But he acknowledged a hit from tighter lending standards in the subprime mortgage sector, which most likely made it more difficult for buyers without topflight credit to get financing to buy a home.
"We may be seeing some losses as a result of the subprime fallout," he said in a statement. "It's too early to measure a significant impact from tighter lending standards, which should moderately dampen activity."
Still, Lereah said low mortgage rates and reduced prices from sellers wary of the soft market should help sales to gradually improve during the second half of this year. He said weak sales are "masking improved fundamentals in the housing market."
But Phillip Neuhart, an economist with Wachovia, said it's clear that potential home buyers are being spooked by the continued bad news about home sales and prices, as well as problems in subprime mortgages.
He pointed out that housing worries were one of the factors in the drop in the Conference Board's consumer confidence index, also released Tuesday.
"It's a headwind to their confidence, even if it's not yet a headwind to their pocket book," he said. "Even if they're not trying to sell their house or getting hammered with problems with a subprime mortgage, consumers can't ignore the headlines."
Neuhart pointed out that the Conference Board's question asking if consumers intend to buy a home in the next six months, found only 2.7 saying they are looking to buy in the April survey, which is down more than 20 percent from the 3.4 percent who were looking to buy only two months earlier.
"It's a market a lot of consumers are frightened to enter," he said. And he said reports from home builders of a weak start to the spring home selling season suggest that the pace of sales will continue to fall through at least mid-year.
There were sharp drops in sales in every region of the country last month as the annual sales pace slowed to the weakest level since June 2003, before the record sale and building boom that began that year.
