Americans trying to sell their homes got more bad news in October. The median price of an existing single family home sold in October, 2006 was down 3.4% from October, 2005. Buyers, on the other hand, have something to celebrate–there is now a 7.4 month supply of existing homes for sale in the United States.
The condo market is a bigger problem: The median price of a condo sold in the U.S. in October traded at a price 5.3% below October, 2005.
Remember the National Association of Realtors? They’re the group that ran a full page ad in major American newspapers earlier this month with the headline: “It’s a great time to buy or sell a home.” Their ad listed five reasons why now was a good time to buy a home. Well, their tune is changing. Just yesterday their chief economist said house prices have further to fall!
I’ve often written that the housing market would face a hard landing as opposed to a soft landing… that housing and construction would be hit hard in the U.S. and that its industry recession would spill over into aspects of the U.S. economy. And that’s exactly what’s happening right now.
Consumers and investors might take comfort in knowing Fed Chief Ben Bernanke is still concerned about inflation. In his first speech on the economy in four months, in a speech to the National Italian American Foundation in New York, earlier this week Bernanke told listeners he’s still very focused and concerned about inflation.
I’m more worried about deflation (like falling house prices) and think my readers should be worried about it too.
NEWSFLASH–The only construction company investors will find interest in these days is not in North America. China Communications Construction Co., which builds tunnels, roads and bridges in China, plans to sell 15% of its equity in a public offering. The 15% is expected to fetch $2 billion. Just like the last major Chinese company that went public (in that case a regional bank) you can expect investors to line up for shares in this China construction company.