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October 26, 2006
Home prices plunge! The median price of a new home plunged in September by the largest amount in more than 35 years, even as the pace of sales rebounded for a second month.
INFLATION ALERT: Rent, not home price, is used to calculate inflation. Rising rent numbers detailed in the link below could alter inflation projections, causing a cascade of problems from higher interest rates to plunging a record high DOW (we've been saying that on Post Scripts for months).
U.S. stock losses intensified Friday afternoon, as a weaker-than-expected third-quarter gross-domestic-product report provided an excuse for investors to take a break from a recent rally...blamed on mostly cooling in housing market.
The Commerce Department reported that the median price for a new home sold in September was $217,100, a drop of 9.7 percent from September It was the lowest median price for a new home since September 2004 and the sharpest year-over-year decline since December 1970. The weakness in new home prices was even sharper than a 2.5 percent fall in the price of existing homes last month, which had been the biggest drop on record.
In the quarter ended Sept. 30, the average advertised rent reached $978, up 3.9 percent over the year-ago period, according to an analysis of 75 markets by real estate research firm Reis Inc. in New York. Some of the biggest increases were seen in Florida and Southern California.
Posted by Post Scripts at October 26, 2006 11:51 AM
Comments
I do think it is importnat to note that these falls (an average of about 6% nation wide with teh worst market being in western florida at about 18%) are after many of these same markets incresed over 100-150% in the last 4 to 5 years. So its not exactly like were experiencing a total melt down here.
Im not insiuating in any way that you are suggesting that Jack. It just seems like everywhere I turn, everyone is talking about a horrible housing market, and I just dont think the numbers are there to support the sort of doom and gloom that CNN and MSNBC are talking about.
Posted by: Nick Freitas at October 26, 2006 04:36 PM
I would add that extremely low interest rates caused a buying frenzy which in turn caused a huge demand which then caused a rise in housing prices...buying at that peak was probably a mistake for investors and an unavoidable shame for those that were relocating. This current trend is more like a "settling" of housing prices to a more natural level.
Last I heard, those in the know were expecting interest rates to fall a bit with no significant inflation worries.
Maybe it's just election madness?
Posted by: Tina at October 27, 2006 07:54 PM