More Signs Of Coming Real Estate Bust
-- February 27, 2003
Despite record-low mortgage rates, new home sales plunged a more-than-expected 15% in January -- that's the biggest drop in sales since January 2002. The announcement comes on the heels of the release of the MBA's latest mortgage application index. Applications to purchase a home, as opposed to refinancing, fell to their lowest level in a year for the week ending Feb. 21. In the last four weeks, applications for new mortgages have fallen 15%, indicating that February will also be a tough month for home sales.
Plus, claims that weather was to blame for these declines are unfounded. Three out of four regions experienced the downturn in sales: The Mid-West, the South, and the West. Meanwhile the Northeast, which experienced the most adverse weather conditions in January, posted higher sales.
Snowstorms aren't the culprit here. It's the storm clouds of increasing layoffs, impending war, falling stock markets, and higher home heating and gas costs that are keeping consumers wary. And as these conditions worsen, prospective homebuyers are going to delay or even forgo their purchases.
related article: New-Home Sales Plunge 15 Percent