Housing Market

Durable goods took an unexpected tumble in February, the Commerce Department announced today, with a 1.7% drop headlining a raft of bad economic news. Analysts expected a 0.8% increase. “Businesses definitely have shown they are beginning to retrench,” one analyst told Bloomberg. “Demand is weakening.” New-home sales, meanwhile, fell 1.8% to a 13-year low, despite a median-price drop to $244,100. More »

Home prices plummeted again in January, falling a record 10.7% compared to January 2007, according to the bellwether S&P Case/Shiller Hope Price composite. The March consumer confidence index, also out today, plunged to a 5-year low in yet another indication of recession, Bloomberg reports. The Conference Board measures consumer confidence as well as expectations for the next 6 months; that metric fell to a level not seen since the Nixon administration. More »

Young people have long fled recessionary job markets by moving back home, but the current crisis has a new demographic scurrying there: the middle-aged. "This is not like, 'OK, my son just graduated from college and needs to move back in' type of thing," says one financial planner, who has seen more adult children leaning on parents for everything from rent to groceries. More »

The best way for the Fed to help reverse the sagging economy is for it to buy some of the $6 trillion in outstanding mortgage-backed securities that have Wall Street so nervous, investors say. The move would ease the credit crunch but put taxpayers at risk. It’s an option the Bush administration has been reluctant to take, reports Bloomberg. More »

"Regulation" is becoming less of a dirty word in Washington in the wake of the mortgage meltdown, woes on Wall Street, and scares over tainted food and toys. Many Democrats and even some Republicans want a shift from voluntary industry standards in vogue since the Reagan administration. "We're in for a potentially significant regulatory response," one economist tells the Wall Street Journal . More »

Existing home sales stunned Wall Street today with an unexpected spike, Bloomberg reports. The metric rose 2.9% in February to an annual pace of 5.03 million. Analysts had predicted yet another decline, to a 4.85 million pace. But one economist said this was only a “temporary pause.” “We’re still a long way from a recovery in housing,” he warned. More »

US real estate is hurting, but the top price for a beachfront summer rental in Malibu hit $150,000 this year. The area is flush with homes valued at or above $10 million—a bracket unaffected by the housing slump. And Tinseltown's elite is happy to pay. "Recession? What recession?" one Malibu real estate agent asked the Los Angeles Times . More »

A deluge of new condos is about to hit many American cities already flooded with an unprecedented number of unsold units, the Wall Street Journal reports. This year, thousands of projects started at the height of the housing boom will be completed; oversupply and economic slowdown are likely to cause prices to plummet in condo-heavy cities like Miami, Atlanta, and Dallas.   More »

The housing market collapse that's sending homeowners into foreclosure is starting to hit small- and medium-size builders left with developments they're unable to sell, the Wall Street Journal reports. Buyers are canceling contracts and builders are missing mortgage payments on often highly leveraged projects. Small regional banks, in turn, could be the next victims. More »

Federal Reserve boss Ben Bernanke’s own home illustrates the very crisis his organization must fight—in the midst of a national housing slump, it’s worth roughly the same as when he bought it in 2004, Bloomberg reports. Values peaked just after that; the fact that his Capitol Hill pad is still worth about $839,000 suggests the downturn is reaching the country’s richest neighborhoods. More »

The credit crisis that’s roiled financial markets has its genesis in the housing boom that began in 1998, David Leonhardt writes in the New York Times . The boom led lenders to create new financing options—including subprime loans—as investors saw potential for huge returns. Low interest rates encouraged investors, and homeowners, to stretch themselves too thin—and the seeds of crisis were planted. More »

The Federal Reserve's latest rate cut might boost the economy with cheaper credit, but economists worry a freed inflation genie could be behind any magic, the Washington Post reports. Commodity prices rose to record levels in expectation that the rate cut would keep demand high, and the price hikes are liable to soon filter down to the checkout line. More »

Housing starts fell yet again in February, and building permits hit a 16-year low, Bloomberg reports. The annual housing start rate fell to 1.065 million homes, a 0.6% drop from January, while permits sank 7.8%, indicating still bigger declines to come. “We don’t see it bottoming out,” said one Wachovia economist. February’s starts beat estimates, but permits fell more than forecast. More »

A hotline aimed at helping distressed mortgage borrowers is frequently overwhelmed by caller volume and rarely able to provide substantive aid, MSNBC reports. The Hope Now Alliance—a group of lenders and community groups heavily promoted by President Bush—is designed to improve lender-borrower communication and modify mortgages, most commonly interest-rate freezes on adjustable-rate mortgages. More »

France is in the throes of its worst housing crisis since World War II, which has led to some sordid dealings in some cities. With many young people unable to pay sky-high rents, landlords are offering apartments “for services”—usually sexual ones, the BBC reports. As homelessness and bankruptcy skyrocket throughout Paris, such Faustian leases are often the only option. More »

Stoking fears of recession, US retail sales fell in February by .6%, the Wall Street Journal reports, despite economists' predictions of a 0.1% increase. Sales had been up a revised 0.4% in January. Factors cited in the decline include rising gas prices, falling home values, the credit crunch, and a soft job market, with 63,000 jobs disappearing in February. More »

Eco-friendly homebuilders are faring well despite the plunging US housing market, Newsweek reports. With home sales at a 15-year low, a national survey showed that buyers last year were ready to spend an extra $8,964 on a home that cuts utility bills. "It's taken almost as a fait accompli that green building is where the market is headed," a pro-green advocate said. More »

The US lost 63,000 jobs in February, the second straight month payrolls contracted and the worst drop since 2003, catching economists off guard and fanning fears of recession anew, Bloomberg reports. Economists hoped the economy would add 23,000 jobs after declining a modest 17,000 in January, when the unemployment rate rose to 4.9%. More »

Government-backed mortgage guarantors Fannie Mae and Freddie Mac can now back loans up to $729,750, the Wall Street Journal reports, after the Federal Housing Administration put into effect that provision of the federal economic stimulus package today. More than 70 counties in the US are subject to the new limit, and ceilings will rise from the previous cap of $417,000 in many others. More »

Home foreclosures and mortgage delinquency in the US saw record highs in the last three months of 2007. Reuters reports that 0.83% of US loans entered foreclosure in the fourth quarter, close to double the 0.54% of the same period in 2006. Mortgage delinquency hit 5.82%, the highest since 1985 and a percentage point higher than the year-ago period. More »