U.S. Mortgage Foreclosures Soar, New Home Sales Drop

Posted on October 29th, 2007 by Samanta Parks

It has been reported that the number of U.S. home mortgage foreclosures more than doubled in August, 2007 and increased 36% from the previous month, showing that many more homeowners are unable to make timely payments on their home mortgages. They are also having a problem selling them thanks to the current national housing slump. According to RealtyTrac, Inc., there was a total of 243,947 foreclosures in August, representing a 115% increase compared to August, 2006 when there were just 113,300 nationwide. In July, 2007, there were 179,599 home foreclosures.

Further complicaing the entire national housing mess, August, 2007 is reported to have been the worst month for the sale of new homes in the last seven years, with many builders and developers clearly feeling the pinch. This downward move more than wiped out July’s upward tick in new homes sales and refelects the spiraling credit issues that caused last month’s big stock market decline.

During the past twelve months, new home sales dropped 21%. This is forcing builders and developers to offer very-large incentives to buyers in order to move their products. The US government also reported that the median prive of a new home sold was $225,700, down 7.5% from the same time last year. This represents the single largest decline in 37 years. Existing home sales also declined by 4.9% in August, 2007.

Finance professionals point to the subprime mortgage crisis as taking a toll on buyer demand. This, in turn, affects builder confidence. According to the National Association of Home Builders, home sales are not expected to begin increasing again until at least the second quarter of 2008 and housing starts probably won’t start recovering until the third quarter of the year. Until then, the market will likely not have any meaningful growth potential.

Inventories of new homes now for sale went up to an 8.2 month’s supply showing that continued price reductions will have to be offered whule builders and developers search for innovative new ways to close deals with homebuyers.

Ass for foreclosures, bank repossessions went up to 42,789 in August compared with only 20,116 a year ago. There were 26,842 homes foreclosed in July of this year. Right now, the highest foreclosure rates are in Nevada, California, Massachusetts and Florida, states where the largest number of investors eager for fast-resale at a profit were the most active. Nevada reported that there was one foreclosure filing for every 165 households in the state or 6,197 August filings; California had one filing for every 224 households and 57,845 foreclosures, up 48% from July and an increase greater than 300% over the same month in 2006. In Florida, there was one foreclosure for every 243 households or 33,932 foreclosure filings for a 77% increase over July and more than a 100% increase over August, 2006.

Georgia, Michigan, Ohio, Colorado, Indiana ,Texas and Arizona were also in the list of ten states with the highest foreclosure rate. These depressing statistics combined indicate that we can expect things to become even worse before there is any kind of turnaround.