I am more convinced than ever today that the housing recession is fueled by a lack of confidence, and I am also more convinced than ever that restoring confidence in housing is going to take a lot more than just shoveling money at the banking industry.
Existing home sales fell 2.2% in August from July. That means nothing. Home sales have not moved at all since December of 2007.
A little up, a little down each month, but essentially sitting at an average annualized rate of 4.93 million units. Wait--so 4.93 million homes are going to be sold this year? That’s not so bad, right? Wait again--1.97 million of those, conservatively speaking, are distressed sales, i.e. foreclosed homes or short sales of homes whose sellers have no choice.
Okay, so still 2.96 million regular homes will be sold this year. That’s not terrible, right? I guess not, unless you want to consider the fact that three years ago more than 7 million homes changed hands in one year, with foreclosure rates at historic lows.
It’s the mortgage problem though, right? And the falling prices, right? Well, mortgage rates have actually come down 75 basis points in the past five weeks, but mortgage applications last week dropped almost 11%.