The Bankruptcy Law Firm, Prof. Corp

Call Today 1-310-559-9224

Free First Consult to Tell You if We Can Help You ♦ Fair Prices

We are OPEN for business and in compliance with Corona Virus shut down regulations governing CA businesses. Read more.

Home Articles Existing Home Sales Tumble

U.S. Economy: Existing Home Sales Tumble 8 Percent

October 24, 2007 - By Bob Willis

Oct. 24 (Bloomberg) -- The U.S. housing industry plunged deeper into recession last month as the August credit-market collapse made it harder for buyers to obtain loans.

Sales of previously owned homes fell 8 percent in September to an annual rate of 5.04 million, the fewest since records began in 1999, the National Association of Realtors said in Washington. The decline was almost twice as steep as economists forecast, while the median price dropped the most in almost a year.

Trading in federal funds futures suggests a 100 percent probability that the Federal Reserve will cut interest rates next week; the only question is how much. Investors increased bets that the reduction will be a half point, rather than a quarter point. Treasury notes climbed.

"The worst isn’t behind us, the worst is here right now," said Jonathan Basile, an economist at Credit Suisse Group in New York. "Housing is going to be a significant drag on the third quarter and fourth quarter."

Economists had forecast resales to fall 4.5 percent to an annual rate of 5.25 million from a previously reported 5.5 million pace in August, according to the median estimate of 76 economists in a Bloomberg News survey. The previous month’s sales were revised to 5.48 million.

The median price fell 4.2 percent to $211,700, compared with September 2006.

‘Not the Bottom’

"Chances are this is not the bottom for the housing market," said James O’Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. "The extent to which housing is spilling over to the broader economy is still unclear, and that’s what the Fed will be trying to determine between now and next week."

Traders see a cut in the Fed’s benchmark rate as a certainty when policy makers meet Oct. 30-31. That’s up from 88 percent yesterday and 54 percent a week ago, based on futures prices on the Chicago Board of Trade. The most likely outcome is a quarter-point reduction and there is a 14 percent chance the cut will be a half point.

Economists at Lehman Brothers Holdings Inc. today changed their Fed-rate call to a quarter-point cut from no change following the slump in sales.

‘Cut Likely’

"With the Fed faced with still-unsteady financial conditions, significantly weaker housing data than had been expected and the prospect of disappointing the market if they chose not to go, we think the risk-management view of handling the economy makes a 25 basis-point rate cut likely," said Drew Matus, a senior economist at Lehman in a note to clients.

Stricter lending standards and higher borrowing costs are making it more difficult to qualify for loans, causing an increase in the number of unsold properties and pulling prices down. Some economists say falling home values, by making owners feel less wealthy, may reduce consumer spending.

"The credit freeze in August definitely impacted sales in September," said Lawrence Yun, a senior economist at the real- estate agents’ group. The impact was greater on jumbo loans, or loans larger than $417,000, affecting high-priced areas such as California, Yun said.

The number of homes for sale at the end of the month rose to 4.4 million. At the current sales pace, that represented 10.5 months’ supply, the highest since record keeping began in 1999 and up from 9.6 months in August.

Inventory Grows

The inventory of single-family homes represented a 10.2 months’ supply, the most since February 1988.

Resales of single-family homes fell 8.6 percent to an annual rate of 4.38 million, the fewest since January 1998. Sales of condos and co-ops dropped 4.3 percent.

Purchases declined in all four regions, led by a 10 percent decrease in the Northeast.

The volume of mortgages issued this year will fall to the lowest since 2000, the Mortgage Bankers Association forecast on Oct. 17. Foreclosures doubled in September from a year earlier as subprime borrowers struggled to make payments on adjustable- rate mortgages, RealtyTrac Inc. said Oct. 11.

"We have a ways to go in the housing recession," Douglas Duncan, the Mortgage Bankers Association’s chief economist, said last week.

Today’s report corroborates earlier figures this month from the Realtors’ association that the housing slump is worsening.

More Declines

Pending sales plunged 6.5 percent in August to the lowest level on record following an 11 percent plunge in July. The measure tracks contract signings, while the figures on sales of existing homes are based on closings, which usually occur a month or two later.

The real-estate agents’ group this month reduced its sales forecast for the 10th time this year.

Fed Chairman Ben S. Bernanke last week said the drop in residential construction will be a "significant drag" on growth into 2008, though evidence of a broader impact on spending is limited. He reiterated that policy makers will "act as needed" to secure growth and contain prices.

Economists have lowered their outlook for economic growth this year since the August turmoil in credit markets. The economy will grow 2 percent, the least since 2002, according to the median forecast in a Bloomberg survey taken earlier this month. Economists had projected a 2.5 percent rate of expansion at the start of the year.

Declining home construction has detracted from growth for the six quarters ended in June.

D.R. Horton Inc., the second-largest U.S. homebuilder, said Oct. 16 that orders in the fiscal fourth quarter plunged to the lowest in almost six years as customers backed out of purchases and banks restricted lending.

Chairman Donald Horton said in a statement that prospective buyers had more difficulty obtaining mortgages, hurting demand.

"Buyers continued to approach the home-buying decision cautiously," Horton said. "We expect the housing environment to remain challenging."

The Bankruptcy Law Firm, PC represents individual and small business debtors in filing bankruptcy in each of the following counties which comprise the central district of California bankruptcy court: Counties of Los Angeles, Orange, Ventura, San Bernardino, Riverside, Santa Barbara, and San Luis Obispo (South ½). Contact us at (310) 559-9224 or by emailing to: KMARCH@BKYLAWFIRM.COM for a free first consult. We look forward to helping you.

Free First Consult to Tell You if We Can Help You

Phone Us at (310) 559-9224

The Bankruptcy Law Firm

10524 W. Pico Blvd.
Suite 212
Los Angeles, CA 90064

Phone: (310) 559-9224
Fax: (310) 559-9133



The Bankruptcy Law Firm

Fill In and Submit this form.

An attorney client relationship is not established by submitting this initial contact information to our office.

You can contract with The Bankruptcy Law Firm, PC, with confidence, because The Bankruptcy Law Firm, PC is a member of the Better Business Bureau, and has met all requirements for being certified by the Better Business Bureau as a reliable business. Click on the BBB logo above to confirm The Bankruptcy Law Firm's certification by the BBB.

Member of National Association of Consumer Bankruptcy Attorneys

Los Angeles Bankruptcy Attorney Disclaimer: The information on Los Angeles bankruptcy law, filing bankruptcy, and other Los Angeles Bankruptcy information presented at this site does not constitute legal advice and does not create any attorney-client relationship or contract of any kind with the Bankruptcy Law Firm, PC or bankruptcy lawyer Kathleen P. March, Esq. The Bankruptcy Law Firm, PC uses a written contract for each client and will only be representing you if you and the law firm sign a written legal representation contract and you pay law firm for the bankruptcy legal services it performs for you. Information on this law firm web site is provided for informational and educational purposes only. Information herein is not offered as, and does not constitute, legal advice. You should never make legal hiring decisions solely upon web pages, brochures, advertising or other promotional materials. Please contact a Los Angeles bankruptcy lawyer at our bankruptcy los angeles law firm for your free first consult to find out whether our law firm can represent you.

This web site might be characterized as an advertisement under California's State Bar Rules and is not intended to solicit clients for matters outside of the State of California. Always seek the advice of an attorney from your own jurisdiction before relying on information from this site or any web site.

This Bankruptcy Law Firm is a federally designated DEBT RELIEF AGENCY as defined in the 2005 amendments to the US Bankruptcy Code. This law firm provides legal advice regarding the pros and cons of filing bankruptcy and represents people and small businesses in filing for bankruptcy relief under the US Bankruptcy Code. Debt Relief Agency Notice.

Kathleen P. March - Los Angeles Bankruptcy Lawyer and Former Los Angeles Bankruptcy Judge - claims the copyright (2002-2021) to the content of all pages on All rights reserved.