US housing market decline may start to slow

Homes Mar09.jpg

US new home sales began falling in 2005, when they peaked at 1.4 million a month. Last month, as the above chart from the ACC weekly report shows, they were down to just 337,000. Similarly, new home inventory has risen to 12 months. Each new home uses over $16k of chemicals, so this decline has had a major impact on industry sales.

But, at last, there are signs that the decline may be slowing:
Existing home sales have been stable at c4.6 million since November
• Foreclosures have accounted for c40% of this volume
• Foreclosure prices are c20% below market, encouraging buyers
• The US Fed aims to cap interest rates via its ‘quantitative easing’ policy

Equally, spring is normally the peak time for sales. And after 4 years of constant decline, any relief, even temporary, would certainly be welcome.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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