Home sales still weak throughout the country

The National Association of Realtors said 5.75 million existing homes (seasonally adjusted) were sold in July, a drop of 9 percent from 6.32 million in July 2006. The volume was down 0.2 percent from June, the fifth consecutive month of declines. The number includes single-family, townhomes, condos and co-ops.

The median home price fell for the 12th consecutive month, to $228,900. That was down 0.6 percent from last July's record median of $230,200.

Looking at just existing single-family homes, sales of 5 million units in July were down 9.3 percent from last July, and the median price was $228,600, a 1 percent drop from last year.

Sales of existing condos and co-ops were at 750,000, down 7.5 percent from last July.

The sales slump was most pronounced in the Western United States, where the 1.12 million existing homes sold represented a 15.2 percent decline from a year ago.

In the Northeast, sales were 2.9 percent lower than in July 2006. They were down 10.7 percent in the South and 5.6 percent in the Midwest.

Nationwide, the group said, inventory of existing homes stood at 9.6 months in July, the highest level in 16 years.

U.S. Home Prices Fall

Forecasters expect the median price of U.S. homes to fall between 1 percent and 2 percent this year in what would be the first such decline since 1950, when federal agencies began tracking such statistics, the New York Times reported on Sunday.


The Office of Federal Housing Enterprise Oversight is scheduled to release the home-price index on Thursday, and research firm Global Insight expects it to show a decline of about 1 percent between the first and second quarter, according to the newspaper.


Global Insight also expects the decline of U.S. home prices to peak at 4 percent between their highest point in 2007 and the projected low point in 2009, the New York Times said.


The New York Times said other forecasters expect the index to climb slightly in the second quarter before falling later this year.

Foreclosure Rates are Geographic Specific

Foreclosure filings rose 9 percent from June to July and surged 93 percent over the same period last year, with Nevada, Georgia and Michigan accounting for the highest foreclosure rates nationwide, a research firm said Tuesday.

The filings include default notices, auction sale notices and bank repossessions. The figures are the latest measure of the ailing housing market, which has seen defaults and foreclosures soar as financially strapped borrowers have failed to make payments or find buyers.

In all, 179,599 foreclosure filings were reported during July, up from 92,845 in the year-ago month, according to Irvine-based RealtyTrac Inc.

A total of 164,644 foreclosure filings were reported in June.

The national foreclosure rate in July was one filing for every 693 households, the firm said.

"While 43 states experienced year-over-year increases in foreclosure activity, just five states -- California, Florida, Michigan, Ohio and Georgia -- accounted for more than half of the nation's total foreclosure filings," said RealtyTrac Chief Executive James J. Saccacio.

Nevada posted the highest foreclosure rate: one filing for every 199 households, or more than three times the national average. It reported 5,116 filings during the month, an increase of 8 percent from June.

Georgia's foreclosure rate was more than twice the national average, with one filing for every 299 households. The state reported 12,602 foreclosure filings, up 75 percent from June.

Michigan reported 13,979 filings in July, a 39 percent spike from June.

California, Florida, and Ohio were among the states with the highest number of foreclosure filings in July, the firm said.

California cities continued to dominate top metropolitan foreclosure rates.

The state reported 39,013 foreclosure filings last month, the most by any single state, but the number of filings rose less than 1 percent from June's total.

The state's foreclosure rate was one filing for every 333 households, RealtyTrac said.

Florida's foreclosure filings fell 9 percent between June and July to 19,179. The July figure represents a 78 percent jump from a year ago.

RealtyTrac did not say if a single property received more than one notice. The company did not break out the exact property count.

In recent months, the mortgage industry has been battered by rising defaults and foreclosures, primarily driven by borrowers with subprime loans and adjustable rate mortgages.

Lagging home sales and flat or decreasing home prices have made it more difficult for homeowners who fall behind on payments to sell their homes and clear the debt, spurring the rise in foreclosure activity.

FICO Facts

To receive a FICO score, a person must have at least one credit account open for six months and at least one that has been active within the last six months. Here are a few tips on how to improve that score:

· Pay bills on time, and pay at least the minimum amount due.

· Contact your creditors immediately if you miss a payment, and work out a payment plan (preferably before they report you to the credit bureaus).

· Do not close credit card accounts in good standing. Someone with no history of credit tends to be seen as a higher risk than someone who has a record of managing debt responsibly.

· Avoid charging to the limit of one card. It's better to charge less on two cards with room to spare.

· Ask creditors to raise your credit limit so that you do not appear overextended.

· Do not open new accounts, because it shows an interest in acquiring new debt, which can lower your score.

· Aim for a rich mix of credit, with revolving credit (credit cards) and installment debt (car loan, student loan).

· Correct errors on your credit reports.

· If you suspect your creditor is not reporting positive information to the bureaus, contact the creditors or the bureaus directly to set the record straight.

· Do not assume that a high salary guarantees a good credit score.

· Find out the key factors that are dragging down your score so you can fix them.

SOURCES: MyFICO.com, Freddie Mac's CreditSmart program

Here's how you can contact each credit bureau:

· Equifax: 800-685-1111.

· Experian: 888-397-3742.

· TransUnion: 800-888-4213.

Here's where you can request your free credit report:

· http://www.annualcreditreport.com/.

Construction Falls in July to the Slowest Pace in More Than a Decade

The Commerce Department reported Thursday that construction of new homes and apartments dropped 6.1 percent last month to a seasonally adjusted annual rate of 1.38 million units. That was down 20.9 percent from the pace of activity a year ago and represented the slowest pace since January 1997.

The housing industry, which had enjoyed a prolonged boom until 2006, has been struggling this year with a deepening slump as builders are slashing prices and throwing in various incentives in an effort to unload record levels of unsold homes. The problems have been worsened by rising home foreclosures, especially in the subprime market, a development which is dumping even more homes onto the glutted market.

In other economic news, the Labor Department reported that the number of newly laid off workers filing for unemployment benefits rose by 6,000 last week to 322,000. The increase was unexpected. Analysts had been looking for a decline of around 1,000.

The July drop in housing construction followed a 2.1 percent rise in June, which had been driven by a big increase in apartment building.

Applications for building permits, considered a good barometer of future activity, fell by 2.8 percent in July to an annual rate of 1.373 million units.

Housing construction fell in all parts of the country except the Midwest which posted a 2.6 percent increase in July. Construction starts were down 11 percent in the South, 3.7 percent in the West and 1.3 percent in the Northeast.

The current housing slump is the worst since a downturn that occurred during an economic recession in 1990-91.

Overall economic growth has slowed but so far there has been no recession as other sectors have offset the weakness in housing. However, private economists say that the threat of a recession would rise if consumer and business confidence were seriously eroded by the current troubles in financial markets.

Home Prices Are Down in a Third of Cities

The new figures from the National Association of Realtors underscored the severity of the current housing slump, the worst downturn in 16 years.

However, Realtors officials said they saw some glimmers of hope in the data. They noted that existing home prices were up in 97 of the 149 metropolitan areas surveyed compared with the sales prices of a year ago.

That represented price gains for 65 percent of the areas surveyed, an improvement from the first quarter of this year when only about 55 percent of the metropolitan areas reported price gains from the same period a year ago. In the fourth quarter of last year, less than half of the metropolitan areas reported price gains.

"Although home prices are relatively flat, more metro areas are showing price gains with general improvement since bottoming-out in the fourth quarter of 2006," said Lawrence Yun, senior economist for the Realtors.

The states suffering the biggest drop in sales in the second quarter, compared to the same period a year ago, were Florida, down 41.3 percent, and Nevada, down 37.5 percent. Other states with big declines were Arizona, down 23.4 percent; Tennessee, down 21.5 percent; Maryland, down 21.1 percent, and California, down 19.8 percent.

Bucking the downward trend, six states actually showed sales increases during the second quarter while one state had unchanged sales and there was incomplete data for two states, the Realtors reported.

Wyoming had the biggest sales increase, a rise of 10.8 percent in the second quarter of this year compared to the second quarter of 2006. Sales were up 4.1 percent in Iowa from a year ago while sales in North Dakota rose by 2.9 percent, the third strongest gain.

Nationwide, sales of existing homes totaled 5.91 million units at an annual rate in the second quarter, down 10.8 percent from the sales pace of the second quarter of 2006.

The national median sales price in the second quarter was $223,800, down 1.5 percent from a median price in the spring of 2006.

the Effects of Falling Sales on Prices of Real Estate

A market price of any product is determined by several factors. In real estate industry, the price of a house is always vulnerable to faltering financial conditions of the market. The housing sale is the most influencing factor in determining its price. In recent times, the wavering housing sale is being expected to leave a deep trace in housing price.

The recently published House Price Index report of Office of Federal Housing Enterprise Oversight (OFHEO), declares that there is price appreciation of 0.5% higher than the fourth quarter of the last year. This is recorded to be the lowest rate since 1998. The price appreciation comparison of this first quarter report of 2007 with the previous two-quarters' reports of 2006 shows poor record by 1.3%. Though at the beginning of 2007, the price was higher than the previous year by 4.3%, yet this comes out to be the lowest yearly comparison record since third quarter of 1997.

This appreciation record of HPI, when fed up with the information on home purchase and refinance, was turned out to be only 3% on quarter comparison between 2006 and 2007. The overall housing prices have arisen at the beginning of 2007, but it was the lowest rate in 10 years. The growth rate of the housing prices in the last year was faster than other non-housing materials and services by almost 3 points.

The existing home sales were down 2.6% in April, where new home sales jumped up several points. Prices rose slowly after May-June and inventories on the other hand decreased slightly. The national median existing home price was up by 0.3% from the last year. This was accompanied by the backlog clearance of unsold homes by 4.2% from previous months. Though the industry faced a slower sales rate, yet the inventory stayed on at 8.8 monthly supplies.

The threat of rising foreclosure, the bad market for the subprime borrowers, the declining rate of home sales and mixed information to the buyers became the reasons for the more decline in housing sales. In June 2007, there was a falling of housing inventory. It was supported by a noticeable rise of housing prices. This became the first instance in the last 11 months when the median home price grew higher than the previous year's.

The single-family home sales were fallen in June by 3.5% from May. This was also 12.1% lower than the 5.70 million-units level in the same time of the last year. On the other hand, the median of existing single-family home price was up 0.1% from 2006. Likewise, while the existing condominium and co-op sales were declined by 6.3%, the median sales price was up 2.6% from the previous year.

According to the National Association of Realtors, the housing price will be increased in the next year. This will be as a result of and accompanied by the rising of the real estate sales to almost 6.4 million in the next year. This year, it is estimated to be 6.1 million. While in the previous year, it was 6.5 million. Existing home prices are supposed to rise by 1.8% after this year's 1.4% fall. Also the new-home prices are presumed to gain 2.2% after this year's 2.6% fall.