The United States housing market continues to show signs of major ailments in the most recent statistical reports released for the month on April 2007. March reports looked grim, setting new records for drastic falls in sales and prices, but not the month of April looks even worse. For the ninth time in as many months, sales for existing homes plummeted and median sales prices also dropped at record rates.
The report issued monthly by the National Association of Realtors, a professional association which tracks such statistics as number of sales, prices, and inventory said that April sales dipped sharply by 2.6 percent to a seasonally adjusted annual rate of 5.99 million homes. That level is the slowest and weakest pace set since June of 2003.
In addition to the sharp decline in the number of sales, sales prices also dropped sharply. The median sales price of a home in this country fell to $220,900 which reflects a reduction of .8 percent from April of 2006.
Adding to the difficulties besetting the U.S. housing market are the increasing troubles in the subprime market. Delinquency and default levels are rising dramatically, with a prospect of even more foreclosures threatening in the next 18 months. The subprime mortgage market is aimed at the group of home buyers who may not be able to obtain so-called normal credit or mortgage loans.
Because many subprime mortgage loans made two to three years ago in a booming housing market are now coming up on balloon payments or the first round of rate increases, it is increasingly apparent that the mortgage industry is going to be hard hit in the near future.
Many of the subprime mortgages were placed at the maximum ability of the borrowers to repay with the assumption that salaries would increase, credit picture would improve or the house would continue to increase in value as it had in the previous 2-3 years. None of those things have happened. In addition, because of the type of mortgage, many homeowners now find they actually owe more on the property now than when the loan was first taken out.
As more houses are lost to foreclosure and more people are trying to market the properties quickly in order to avoid foreclosure, property prices continue to slide, while the inventory of unsold homes climbed to 4.2 million in April also an unfavorable record.
The market is hit with a three fold problem for which there may not be an easy solution. Because of the declining prices, first time home buyers may decide to wait a bit longer before purchasing in order to take advantage of even lower sale prices. Those who are at risk of foreclosure, or already in foreclosure will not be able to purchase easily and in the meantime, the lenders are holding an increasing number of foreclosed properties which they are unable to sell except at heavily discounted prices, which drives the average sale price of a home even lower.
Gus Taperman holds a Bachelor's degree in Commerce and completed his master's in Business Administration . He is working as writer and financial consultant to find a Personal loans, Debt consolidation, home equity loans at cheap rates visit www.taperman.com