US housing slowdown continues (first national drop in prices in 11 years)

[Herman Munster]

http://www.ft.com/cms/s/c6ac0e82-4c9b-11db-b03c-0000779e2340.html

Prices of existing homes fell for the first time in 11 years and the backlog of available homes for sale was at its highest since current measures began, underlining the significant slowdown in the housing market. Existing-home sales slipped 0.5 per cent to an annual rate of 6.30m units in August from a level of 6.33m July, according to the National Association of Realtors. They were 12.6 per cent down on the year before

Economists had expected a fall in sales to 6.2m, following a sharp 4.1 per cent decline in sales in July. “The housing market continues to weaken, but the deterioration in this report was relatively modest,” said John Ryding, economist at Bear Stearns.

The Federal Reserve has recently justified its pause in interest rate rises by saying that weakness in the housing sector will put the brakes on growth and help slow down inflation. The latest numbers suggest that the central bank may soon start lowering rates.

‘’Housing is in trouble, the economy is a lot weaker than people think and the Fed will ease policy much faster than what is currently priced by markets,’’ said Michael Kastner, head of fixed income at SterlingStamos.

[Deja Q]

1. Which may be why AT&T is bring jobs back to the US...

The best solution is to have Americans working again.

That will strengthen the economy.

Housing will even itself out over time and people WILL buy again.

[The_Casual_Observer]

2. You mean that they think they have pushed this thing too far?

I've noticed that over the years the economy reacts nonlinearly. Not much happens for a long time in reaction to some disturbance, like the gas prices or the housing bubble, then all of a sudden the whole thing collapses over a few days and it takes years to recover. You get almost no real warning about exactly when it's going to happen, except for little articles like the one posted above.