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Home Sales Index Marks Record Low

[Nov 5, 2007.]

 

A forecasting index for home sales decreased to a record low in August. The downturn appears to be the result of prospective homebuyers having trouble securing mortgages. As a result, forecasters are saying that the housing market will not recover in the short-term.

According to the National Association of Realtors, the index of pending sales for homes dropped 6.5% from July to August. In fact, the sales index is down a whopping 21.5% from last year at this time.

Economists say that the index is fairly accurate in predicting home sales, indicating that the index is a credible source of information. Home prices are expected to continue to decrease until there's a significant turnaround in the market. Meanwhile, in an effort to improve sales of new homes, real estate developers are slashing prices.

However, owners of existing homes are often reluctant to decrease the price of their houses, despite the troubles within the market. They're holding out hope that they can get their price, even though prospective homebuyers are finding it more difficult to obtain loans.

Home buyers in the Northeast and the West in particular are finding it hard to secure loans for luxury homes. It's been said that the housing market is the worst it's been in a decade or a decade and a half.

The August index was 85.5 - a rate below predictions. In fact, it was the lowest rate ever recorded in the index, which was launched at the beginning of 2001.

Sales of single-family homes declined 4.3% in August - the lowest rate in a period of 5 years. Experts say the market may improve during the middle of 2008, although others see more trouble ahead. In fact, some are predicting that the worst is yet to come, with a recession in realtors' futures. Another cut in interest rates by the Federal Reserve, however, could diffuse the situation.

Julie Ann Amos
November 5th 2007

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