The median home prices in US housing industry slumped by 7.7%, highest fall since 1979, in the first quarter of 2008, says NAR.
At least two-third of the US cities saw steep fall in median home prices in the first quarter of 2008, according to the National Association of Realtors (NAR), as reported by BloggingStocks.
The NAR revealed that this was the first time since 1979 when median home prices declined annually at the highest rate of 7.7% to fall at $196,300 in the first quarter of 2008 against $212,600 in the same period last year. Median prices fall variably with 12.3% in western region, 7.9% in Midwest region, 7.5% in southern region and 3.32% in northeast region.
The fall in median home prices is largely attributed to slow growth in wage that fails to cover home prices in the US. People’s financial conditions are not good enough to buy new homes. Besides, reeling under high pressure of inflation due to rise in food, energy and medical care price, the consumer spending in US housing industry is heavily falling. High interest rates are also making the US housing industry to bleed white.
Furthermore, the pressure of several other interrelated issues such as massive job cuts, revision of sub-prime mortgage loan rates, and excessive increase in the housing inventory slumped the median home prices in the first quarter of 2008. The situation was further worsen by huge foreclosures as home buyers, who took credit for buying homes before economic recession, failed to repay their loans.
NAR also said that low home prices and high price inventories would continue to prevail in future as well eventually impacting the US housing industry. Moreover, there are lesser possibilities of any near fall in housing interest loan rates as country is struggling from credit crisis.
According to a research analyst at RNCOS, “The current situation in the US housing industry will continue to prevail until there is a dramatic change in the country’s economy. There is a need to attract homebuyers for selling homes by subsidizing the home inventories. Government should also act on its part by reducing interest rates to make consumers feel comfortable while taking home loans.”
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