Clipped From The Salina Journal
SAUNA JOURNAL Money The Associated Press A house with a for-sale sign in the front yard sits on Gretna Green Way last month in west Los Angeles. Judging from growing statistical evidence and comments by some of the nation's leading builders, the five-year housing boom's run is coming to an end. Housing cooling off Unsold new homes hits record; used home sales slip By DAVID KOENIG Tlie Associated Press DALLAS — Judging from growing statistical evidence and the performance of some of the nation's leading builders, the five-year housing housing boom is indeed over, and the slowdown already is rippling rippling through the economy Earlier this month, the Commerce Department reported reported that January sales of new single-family homes fell 5 percent — the fourth decline decline in seven months — and the backlog of unsold new homes hit a record. And the National Association of Realtors Realtors said used home sales slipped 2.8 percent in January, January, the fourth straight drop and 5 percent below January 2005. Builders also reported a few hiccups. Upscale Toll Brothers said signed contracts contracts in the November-January November-January period fell 21 percent from a year ago, and KB Home reported more buyers backing out of contracts. Still, the prospect of a housing slowdown appears less frightening than it did a few months ago, according to those who track the industry There seems to be little concern concern that a much-touted housing bubble will lead to a collapse in sales and prices. Slowdown, not crash New Federal Reserve Chairman Ben Bernanke said last month that housing would enter a moderate slowdown but not a crash. William Mack, a housing analyst for Standard & Sluggish signs in tiie liousing marlcet Home sales have slowed in recent months — a cooling trend reflected in the stock prices of some of the nation's leading homebuilders. $90 per share Stock prices of selected residential construction companies ,2005 company revenue in billions of dollars ••• KB Home 1 .44 billion JULY AUG. SEPT. OCT. NOV. DEC! JAN. FEB.MARCH SOURCES: Telerale; Hoover's; the companies Poor's, predicted "a soft landing. The overall market is just taking a step back." Explanations for the recent recent cooling-off vary Many people bought homes during the past five years and are staying put. Some analysts blame a decline in consumer confidence. And interest rates have been rising, especially especially for adjustable mortgages mortgages that allowed people to buy more expensive homes than they could have afforded afforded with a 30-year loan. "We started to see the strain in July and August, and by the fourth quarter the market definitely had slowed," said Layne Marceau, president of the Northern California region for Shea Homes, one of the nation's AP largest private builders. Rising prices and interest rates pushed more buyers out of the market. When prices finally did cool, sellers sellers couldn't command a high enough price on their old house to buy the new one, said Marceau, who believes the slowdown is temporary. Prices cut across nation Builders don't like to cut prices — it angers customers who paid more — but last week, Centex Corp. advertised advertised $25,000 off on select homes in the Dallas area after after making a successful similar similar offer in California. Around the country builders are throwing in incentives ranging from financing help to free upgrades like swimming swimming pools and granite countertops. countertops. Some equsQ 10 percent percent of the home's list price. The median price "of an existing existing single-family home has declined since peaking at $219,700 in July to $210,500 in January, according to the National Association of Realtors. Realtors. Few analysts expect a sharp drop in national averages, averages, although they say there could be further declines in some areas that have been among the hottest markets in recent years. David Seiders, chief economist economist for the National Association Association of Home Builders, said California, Las Vegas, Florida Florida and the Washington, D.C., area "have the largest potential potential for a price slowdown." Housing has played a major major role in the economic recovery recovery since 2001, so even slower growth in home sales and prices could have major repercussions. Asha Bangalore, an economist economist for The Northern Trust Co. in Chicago, estimates housing created 43 percent of all new jobs from late 2001 until mid-2005. That included the obvious, such as jobs in construction and mortgage services but also retail and service jobs that were created created because consumers tapped their rising home equity equity to buy more things. "The housing slowdown that we are seeing is very modest, not alarming, but I think the ripple effects are going to be enormous because because of the employment factor," she said.