It’s Official, U.S. Housing Prices Now Declining
Thursday, September 28th, 2006
By Michael Lombardi, MBA for Profit Confidential
It’s official.
Last month, according to the U.S. National Association of Realtors, the median price of an existing U.S. home sold in August fell 1.7% below the price in August 2005. That’s the first time in twelve years the median price of a U.S. home has fallen over a 12- month period.
The current inventory of unsold used U.S. homes sits at the highest level since April 1993. The one year price drop of 1.7% is the second sharpest drop in 38 years.
The drop in price for U.S. condominiums was more devastating. The average price of existing U.S. condo fell 2.4% in August 2006 from a year earlier.
It’s been five months in a row now that the sales of existing homes have declined. Meanwhile, the confidence level of new home builders (according to the U.S. National Association of Home Builders) has fallen to the lowest level in 15 years.
All the while, big cap stocks continue moving higher… as if the breakdown in the housing market is not happening. The big focus of the market and investors seems to be the expectation of lower rates ahead. What a great story courtesy of Wall Street. Can anyone say bear market trap?
When home prices fall, consumers simply feel they are worth less. And when you feel your net worth is declining you tend to spend less, low rates or not.
Any way you look at it, the housing market looks as though it’s headed for a hard landing and not a soft landing. The ramifications for consumers, realtors, home builders, mortgage companies, and the economy could be huge. But the stock market is telling us that we don’t have to worry. Big cap stocks are rising in price and that means everything is okay. I hope my PROFIT CONFIDENTIAL readers don’t buy it.
Next Post: Patience is the Name of the GamePrevious Post: Review Your Portfolio
Tags: bear market, stock market, U.S. home prices
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Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors. Some of our recommendations have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Along the way to building Lombardi Publishing Corporation, now with over one million customers in 141 countries, Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland.Follow Michael and the latest from Profit Confidential on Twitter
