US housing market remains dire in Q3 as economy weakens
26/11/2008 15:49
The drop in US housing prices accelerated in the third quarter as the
country's economy contracted at a faster pace than previously estimated,
according to data released yesterday.
The decline in the S&P/Case-Shiller
US National Home Price Index remained in double digits, posting a record 16.6
percent fall in the third quarter of 2008 compared with the same period of
2007.
This marks an increase from the annual declines of 15.1 percent and
14.0 percent for the second and first quarters of this year respectively.
The
deepening financial crisis, which tightened credit conditions for home buyers,
has weighed on housing prices. Rising unemployment rates, which hit 6.5 percent
in October, made it hard for some homeowners to stay in their
houses.
Distress sales foreclosures and short sales accounted for 35 to 40
percent of transactions in the third quarter, pulling down existing
single-family prices, the National Association of Realtors said.
The weak
economy and the depressing housing sector interlink in a vicious cycle. Lower
property values are eroding household wealth, reducing consumer spending and
increasing the likelihood of an economic recession.
In October, housing
construction also fell to its lowest since 1959, the Commerce Department said,
as building permits, a sign of future residential projects, dropped 12
percent.
Meanwhile, home builder confidence dropped in October to its lowest
since 1985, with declines in construction spending continuing to be a drag on
economic growth.
Xinhua
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