US Housing Market Far From Out Of The Woods
August 27, 2007
The troubled US housing market has again today been in the limelight, after a significant survey revealed home sales had fallen to a five year low.
The study, conducted by the National Association of Realtors, showed that to the year on July, house sales nationwide had fallen to their lowest level since 2002, further emphasising the extent of the problem facing the US economy.
Numerically, sales fell over July to 5.75 million units over the year - down 0.2% from last month’s figures. After positive news of housing growth last week, the underlying problems in housing were again brought to the fore.
Just last week it was announced that the number of new build sales in the US economy had actually increased, despite analyst expectations. Whilst many saw this as a potential turnaround in fortune, analysts were quick to point out the ongoing nature of the situation.
The housing market has been the source of significant unrest in the US economy over the last year, leading to fears of a credit crunch on global scale.
With a lack of demand for housing, construction companies have been forced to lose staff at a rapid rate, reporting poor sales and mounting losses.
Meanwhile, rising interest rates have left many lenders exposed in the already risky sub-prime mortgage lending sector, with increasing defaults leading to liquidity problems.
As such, stock markets across the globe have been thrust into turmoil, with worldwide investor confidence hitting new lows. After extensive rescue packages by the Federal Reserve, and with many lenders on the brink of liquidation, the US economy as whole, and indeed the wider global economy, has been left feeling the heat from the US market.
And with today’s added reminder of the state of the market for housing, it is unlikely that the stock markets will recover any time soon.