Thursday, May 5, 2011

United States in Housing Double Dip

Clear Capital reported today that their Home Price Index shows prices nationally have double dip to .7% below prior lows experienced in March 2009.  Calculated Risk is showing that the REO properties are increasing pressuring housing prices down.  FHA inventory of REO property has increased over 67% since December 2009.  In 2009, there was an economic stimulus, which was inadequate in scope, duration, focus, and amount, which helped counter falling housing prices while leaving continuing high unemployment.  The home buyer credit helped pump up housing sales.  One-third of national home sales are REO.  More than a quarter of home owners nationally still have negative home equity, because the programs put forward have been inadequate and poorly executed by the banks and mortgage servicers as well as inadequately monitored by Federal Government regulators.

You should also be aware that the ISM service sector index was down in April to 52.8 from 57.3 in March and the employment segment was down to 51.9 from 53.7.  While over 50 indicates expansion, this report shows growth is sharply slowing. 

Weekly jobless claims were sharply up 43,000 to 474,000; 4 week moving average was up 22,250 to 431,000, and continuing was up (for first time in several weeks since many people dropping off with expiration of benefits) 74,000 to 3,733,000.  There may be auto and school employee layoffs in this.

If you have been reading the last few posts in this Blog, this further evidence of economic slow down should not surprise you.

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