NPR: New Home Sales Continue Slump

New Home Sales Continue Slump

omniNate, Flickr.com

Sales of new homes logged the fourth drop in just five months, according to the Commerce Department.

The median home price was also down about one percent compared to a year ago, at just over $236,000. That may be good news for folks looking to buy a home, but not good for anyone looking to sell.

Home owners aren't the only ones suffering from the weak housing market; Big Business is taking a hit, too. Several large funds, which had invested millions in subprime lenders, are feeling a little buyer's remorse.

A glut of subprime defaults and foreclosures may force banks, hedge funds and retirement funds to scale back what they're willing to put up for home loans. And that, experts say, could weigh down an already sinking housing market.

Geoffrey Bennett

12:52 PM ET | 06-26-2007 | permalink

Comments (Send a comment)

Subprime lending is only a small part of the problem. Developers and builders have aggressively marketed new-build communities with no down-payment, no closing cost, rate buydown, and adjustable rate loans programs with a captured mortgage company all of which only increases the purchase price of the home. Once taxes are fully assessed on the property and the homeowners rolls out of their buydown rate, their escrows and overall monthly payment balloon. The homeowner cannot refinance since the true value of the property is well below the purchase price and their loan. The overall effect is the wholesale collapse of the subdivision and community. This type of predatory behavior is not the function of rogue mortgage brokers but, believe or not, some of the largest builders and banks in our country.

Sent by Frank Dilenschneider | 11:00 AM ET | 06-28-2007

funny, its not happening in Hampton Roads vA. it seems like the price is going up. this is forcing us to move so that we can purchase our home

Sent by Brother Omi | 6:10 AM ET | 06-29-2007

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