| Low Home Sales and Loan Approvals |
| By Credit Federal |
Published
12/28/2007
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Home Loan
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Good home buyer market but poor loan approval situation
Last month, home sales dropped down to their lowest level in over a decade. The abundance of new homes, foreclosures, and the tighter new home loan approval for poor credit applicants may be the factors which made the situation worse than most analysts expected. The poor sales are now causing fears of a recession.
According to the Commerce Department, new home sales dropped 9% in November from October to a seasonally adjusted annual sales pace of 647,000, the worst sales pace since April 1995.
The expected drop was 1.9%. By region, sales fell in all parts of the country, except for the West. And the news gets worse... The housing situation is not only worse than expected, there doesn't appear to be any remarkable improvement in the coming year.
The median sales price of a new home fell to $239,100 in November. That's .4% lower than a year ago. The median price is where half sell for more and half for less.
Hopeful home buyers are finding it harder to get loan approval, particularly those with bad credit and and/or those seeking jumbo mortgages of over $417,000. The troubled credit market is further cripping home sales. Unsold homes have piled up, which will force builders to cut back, which can affect the overall economy.
Many borrowers; especially those tagged as high risk due to poor credit history, are being rejected for loans, and even those who can get approved have to wait longer than usual to get the financing.
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