Median Home Price Falls for Record Tenth Consecutive Month
Wednesday, June 27th, 2007
By Michael Lombardi, MBA for Profit Confidential
For the tenth consecutive month in a row, the median price of a home in the U.S. has fallen. The median price of a home sold in May was down 2.1% from a year ago.
Ten straight months of falling home prices is a new record. The number of resale homes sold in the U.S. fell in May to the lowest level in four years, according to the National Association of Realtors.
I’d like to remind my readers — make that stress to my readers — that house prices will likely fall in the U.S. this year for the first time since the Great Depression. The psychological impact to consumers seeing the price of their home drop will “hit home” with American consumers in 2008.
U.S. homeowners and potential buyers are dealing with tighter lending requirements and rising interest rates. Add to this combination the fact that the inventory of unsold homes in the U.S. is now at a 4.43 million units (highest inventory level since 1992) and the housing market has all kinds of troubles.
Lately, I have been writing often about the U.S. housing market for the simple reason I believe the contraction and economic damage being caused by this sector is being severely underestimated by analysts. As consumer confidence continues to plummet as the values of their homes decline, consumer spending retracts, the stock market contracts, and recession sets in.
Talking about the stock market, it was the Dow Jones U.S. Home Construction Index (comprised of the largest new home builders in the U.S.) that first tipped us off about the hard landing in the U.S. property market. This index topped out in mid-2005 and is now officially down 50% from its 2005 peak while it continues its freefall.
There is no doubt in my mind: The crashing U.S. housing market will have dire repercussions for the U.S. economy over the next few years.
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Tags: dow jones, interest rates, stock market, U.S. housing market
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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
