new home sales drop as winter chills demand

The bitter winter chilled demand for newly built homes, causing new home sales to sink like a stone. The housing industry, as if it hasn’t been clobbered enough, had a 17 % drop in new home sales in February. A more conservative climate among loan providers is being credited as part of the obstructive conditions. Resource for this article – Bitter winter chills demand and new home sales plummet by MoneyBlogNewz.

Lowering new house starts

Reuters reports the slowing demand, foreclosure difficulties and cold weather has brought on a huge decrease in construction and sale of new homes in the past few months.

In February, there was a 27 percent decrease in new housing starts. There was a decrease in the annual rate of sales of new homes from 300,000 to 250,000. From January to February, there was a 16.9 percent decrease in new home sales. Since February 2010, new home sales decreased by 28 percent.

The delay in construction probably did have to do with winder conditions. Still, the decrease in existing home sales was likely as a result of weak demand. Nobody wants homes while banks have to lend to make it take place. Banks may be unwilling to write personal loans for these homes.

A normal market could help, says economist

The NAR website showed that chief economist for the National Association of Realtors, Lawrence Yun, said that if "mortgage credit conditions would return to normal," the sales would go up which is the problem with "unnecessarily tight credit" and lenders.

Ron Phipps, president of the NAR, echoed Yun by saying that though interest rates for mortgages were certainly lower than many short term loans, lamenting that "credit remains a challenge.". When the credit prices stay low, it is hard to justify a new home payment. The median price for new homes was at $202,100 in Feb. while existing homes were at $156,100.

Glut of foreclosures

There are lots of foreclosed homes on the housing market. It appears to be something the rich do not mind. Cash sales made up 33 percent of all home sales in February, and 39 percent of all homes sold were distressed properties, according to Bloomberg.

Federal Reserve Chairman Ben Bernanke has also been pessimistic about housing, being quoted recently as saying that mortgages were "difficult to obtain" and that "there's no demand for construction," in a recent appearance before Congress.

Purchasing a house is only something few will be able to do. This is for any person with credit or cash to do so. There is some trying to become homeowners that do not have these things. They might not be able to do so. The struggle in the housing market will continue. This will take place until credit can be repaired.

Citations

Reuters

reuters.com/article/2011/03/23/us-usa-economy-housing-idUSTRE72F3XG20110323?pageNumber=1

Bloomberg

bloomberg.com/news/2011-03-21/u-s-february-existing-home-sales-fall-to-4-88-million-rate.html

National Association of Realtors

realtor.org/press_room/news_releases/2011/03/feb_decline