US existing home sales fell in Aug on credit woes

24 September 2008 18:26  [Source: ICIS news]

WASHINGTON (ICIS news)--US existing home sales resumed their downward slide in August, falling 2.2% from July, national real estate officials said on Wednesday, blaming ever-tightening credit terms related to the US financial crisis.


The National Association of Realtors (NAR) said that sales of existing homes in August were at a seasonally adjusted annual rate of 4.91m units compared with July when home sales increased to an adjusted rate of slightly more than 5m.


The August sales rate was 10.7% below the adjusted home selling rate of 5.5m units seen in August 2007, the association said.


NAR president Richard Gaylord blamed August decline in existing home sales on tightening mortgage loan terms due to the ongoing US credit crisis.


“The difficulty in obtaining a mortgage increased over the past couple of months, making it more challenging for creditworthy borrowers to find financing,” Gaylord said.


“Our hope is that overly tight lending criteria can be loosened with reasonable standards and credit so that sales activity can catch up with demand,” he said.


Gaylord said the critical US housing sector is not likely to recover while credit remains tight.


“Home sales will be constrained without a freer flow of credit into the mortgage market,” he said.  “The faster that happens, the sooner we’ll see broad stabilisation in home prices that in turn will help the economy recover.”


He noted that “Historically, housing has led the nation out of economic doldrums - there will not be an economic recovery without a housing recovery”.


Gaylord was critical of the now pending bailout plan that the Treasury Department has put before Congress.


“There is a serious question as to whether a cash infusion by the US Treasury into Wall Street would help consumers by improving mortgage funding,” he said.


Treasury’s $700bn (€476bn) bailout plan would allow the federal government to buy up non-performing mortgage loans and related securities from troubled US banks, but Gaylord and many on Capitol Hill want the package to include some specific help for consumers, such as loan re-negotiations for homeowners facing foreclosure.


($1 = €0.68)


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