New-Home Sales Plunge to Lowest Level in More Than 12 Years, Heighten Recession Fears

WASHINGTON (AP) — The housing market plunged deeper into despair last month, with sales of new homes plummeting to their lowest level in more than 12 years.

The slump worsened even more than most analysts expected, heightening fears that the country might be thrust into a recession.

New-home sales tumbled 9 percent in November from October to a seasonally adjusted annual sales pace of 647,000, the Commerce Department reported Friday. That was the worst sales pace since April 1995.[snip]

By region, sales fell in all parts of the country, except for the West.

In the Midwest, new-home sales plunged 27.6 percent in November from October. Sales dropped 19.3 percent in the Northeast and fell 6.4 percent in the South. In the West, however, sales rose 4 percent.

Over the last 12 months, new-home sales nationwide have tumbled by 34.4 percent, the biggest annual slide since early 1991, and stark evidence of the painful collapse in the once high-flying housing market.

“I think you can classify what we are seeing in the housing market as a crash,” said Mark Zandi, chief economist at Moody’s Economy.com. “Sales and home prices are in a free fall. The downturn is intensifying.”[snip]

On the news here in Vermont, the “ones in the know” piously reassure all that houses are selling. Well, not the McMansions that coat the landscape like crumbs on the kid’s bedroom floor. The handyman specials erected just after the signing of the Magna Carta, they aren’t moving rapidly either. Unless houses are traded in MA and CT like Pokémon caps, somebody is lying.

“A lot of borrowers are being disqualified for loans. If you can’t qualify for a mortgage, the game is over. For those who do qualify, it takes longer to get loans,” said Brian Bethune, economist at Global Insight. [snip]

Ah, Hmmmm, guess that covers the midrange houses. What’s left?

Foreclosures have soared to record highs and probably will keep rising. A drop in home prices left some people stuck with balances on their home mortgages that eclipsed the worth of their home. Other home buyers were clobbered as low introductory rates on their mortgages jumped to much higher rates, which they couldn’t afford.

Problems in housing are expected to persist well into 2008 — a major election year.

The housing and mortgage meltdowns have raised the odds that the country will fall into a recession. And, the situation has given Democrat and Republican politicians– including those who want to be the next president — plenty of opportunities to spread blame around. [snip]

Let us spread it around. Liberals for insisting that it’s racist to withhold mortgages from persons unable to afford public housing, Congress for going along. Bush signed those spending bills that allowed this excess to grow. Republican greed is second only to the likes of Democrats Murtha and Rangel.

To help bolster the economy, the Federal Reserve has sliced a key interest rate three times this year. Its latest rate cut, on Dec. 11, dropped the Fed’s key rate to 4.25 percent, a two-year low. Many economists are predicting the Fed will lower rates again when they meet in late January. [snip]

The problem evinced in this downturn is not a liquidity problem. Money is available. The banks merely tightened up the requirements.

Look back at the Dutch tulip crash, after the meltdown there were plenty of tulips around. Tulips, Beanie Babies and houses are the same fiscal condition. Houses are not worth the asking price so bailing out the homeowner will not ease the market. Even with interest rates artificially low, the borrower still needs to qualify. since we are not a saving nation, down payments are hard to find.

With an owner still paying $400,000+/- for a residence that is worth what?, $200,000 now, do you keep paying or do you walk away and cut your losses? Forget not that banks must maintain a reserve; bad loans cut into this. The available funds for lending get pulled into the reserve, drying up mortgage money.

A recession involves pain to some; deflation causes everyone to lose. Either way we’re going to have an “attitude” adjustment.

Every dark cloud has a silver lining; the lining here is a big bunch of illegals self-deporting because of NO WORK.

We need to start doing our own lawns.

The following is the 2007 winning entry from an annual contest at Texas A&M University calling for the most appropriate definition of a contemporary term.

Political Correctness:
“Political Correctness is a doctrine, fostered by a delusional, illogical, liberal minority and rabidly promoted by an unscrupulous mainstream media, which holds forth the proposition that it is entirely possible to pick up a turd by the clean end.”

The only error in the definition is the term “liberal” which should read “illiberal.”