As summer kicks in and millions of people take vacations or long weekends, home is the not generally where the heart is. Though you'll still see "For Sale" signs, few people are looking to buy or sell a home.
And while the real estate market may be in the summer doldrums, there was certainly a lot of developments in the industry this week. Here's a roundup.
The burning question for some time how the housing slump will affect the overall economy. The general consensus has been not much and that view was amplfied by Philadelphia Federal Reserve Bank President Charles Plosser Wednesday. In a speech, Plosser said there are not likely to be "significant spillover effects," adding that housing's drag on the US economy should "diminish but continue until sometime next year."
The prices of existing and new homes are expected to bounce back next year after a dreary 2007, a real estate trade group said Wednesday.
The National Association of Realtors also said it expects existing-home sales to rise to nearly 6.4 million in 2008, up from the 2007 estimate of more than 6.1 million. Nearly 6.5 million existing homes were sold in 2006, the trade group said.
As for new homes, sales are projected at 865,000 in 2007 and 878,000 next year, but the 2008 projection would still be down more than 20% compared with the nearly 1.1 million new homes sold in 2006.
The Price Isn't Right
Even with the highly publicized decline in home prices over the past year, enough buyers may still be waiting it out, hoping that prices have yet to bottom out. And even that is the case, prices may still be too rich for many would-be buyers and aspiring homeowners.
A new study spells out just how far things would have to get back to what's called typical historic affordability. And as CNBC's Diana Olick, that's 30%-40% in some of the nation's major markets.
Foreclosures And Spec Homes
Affordability may be one problem. Interest rates another.
"I think we're in the middle innings of this ballgame," Thomas Higgins, Payden & Rygel chief economist told Maria Bartiromo on "Closing Bell." "We have further to go."
"We will probably see building permits and housing starts bottom at the end of this year and home sale bottom in early in 08," he adds.
"What's really key is the backup in interest rates," said Higgins, referring to the recent spike in rates that added about 50 basis points to 30-year mortgages. He said it usually takes two to three months for moves like that to show up in sales statistics. Now that the ten-year note is back around 5.00%, Higgins says damage will be limited "as long as we don't see another spike up."
As is often the case, U.S. mortgage applications rose last week, as borrowers rushed to lock in rates, which hit their highest level in nearly a year.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchasing and refinancing loans, for the week ended July 6 increased 1.1% to 626.2.
With home prices sliding in many markets, high inventories and homes sitting a long time on the market, you'd think homebuilders would be putting up as few houses as possible.
Well, not exactly. As Jane Wells reports, in the central valley of California, houses are going up at a healthy pace. In one Standard Pacific development of so-called spec homes Wells visited, she saw just one "For Sale" sign.
It appears spec homes are common practice in the industry. For instance, major builder DR Horton -- which saw third-quarter sales orders plummet -- says half of its home under construction are done on spec. Though builders often wind up slicing the price of such spec homes, its easier to sell a property with a house on it than an empty lot and builders are always looking to get land off their books.
U.S. home foreclosures fell in June after jumping to a 30-month peak in May, but default rates will escalate in the future, real estate data firm RealtyTrac said Thursday.
Foreclosure filings declined 7% but remain 87% above last June's pace, with one filing for every 704 households, the company said.
Activity is expected to spike as the year progresses, because of the thousands of adjustable-rate mortgages that will have to be refinanced, which will mean higher monthly payments for the borrowers.