Worst Sales Of New Homes On Record

Wall Street Advances After Big Drop In New Home Sales, Disappointing Earnings

(CBS/AP)  Sales of new homes plunged by a record amount in 2007 while prices posted the weakest showing in 16 years, demonstrating the troubles builders are facing with a huge backlog of unsold homes.

The Commerce Department reported Monday that sales of new homes dropped by 26.4 percent last year to 774,000. That marked the worst sales year on record, surpassing the old mark of a 23.1 percent plunge in 1980.

The government reported that the median price of a new home barely budged last year, edging up a slight 0.2 percent to $246,900, the poorest showing since prices fell by 2.4 percent during the 1991 housing downturn.

The new report reinforced the view that housing is currently undergoing its worst downturn in more than two decades, with the slump threatening to surpass in some ways the severe housing recession of the early 1980s.

The housing weakness has dragged down overall growth and sent shockwaves through the rest of the economy including the financial sector, which is dealing with billions of dollars in losses in subprime mortgages.

Some analysts are worried that the fallout could become so severe it will drag the entire country into a recession.

The Federal Reserve unexpectedly cut a key interest rate by the largest amount in more than two decades last week following an emergency meeting, and it is expected the Fed will cut rates further at a regular rate-setting meeting this week.

The 26.4 percent drop in sales for 2007 represented weakness in every part of the country except the Northeast, where sales posted a small 1.6 percent advance. Sales recorded declines of 32.2 percent in the West, 26.7 percent in the Midwest and 26.3 percent in the South.

Wall Street Advances On Rate Cut Hopes

A jittery Wall Street advanced Monday, reversing some of Friday's sharp losses as investors took a dismal new home sales report as a sign the Federal Reserve will lower rates this week.

The Dow Jones industrial average rose more than 176 points in a session that was relatively calm when compared to the turbulence of last week.

On the surface, the advance appeared surprising after the Commerce Department reported sales of new homes in December fell by 4.7 percent and that 2007 new home sales plunged by a record 26.4 percent compared to 2006. But while the report at first exacerbated the market's concern that the housing and mortgage crises are causing a recession, it also raised hopes that the Fed might cut rates again by a wide margin to stoke the weakening U.S. economy.

"Anticipation of another Fed rate cut is the main magnet in the market today," said Alfred E. Goldman, chief market strategist at A.G. Edwards & Sons Inc.

He was skeptical the gains would stick - anything the Fed decides after its two-day meeting lets out Wednesday could be met with disappointment. If the rate cut is small or nonexistent, the market will likely be unsatisfied; if the cut is wide, the market may worry the economy is worse than it thought.

"If we do rally into a Fed rate cut, we have a lose-lose situation," Goldman said.

And traders who bet on the Fed's next move were pricing in a more than 80 percent chance of a half-point cut.

"Any less than that could be a problem," said Richard Sparks, senior equities analyst at Schaeffer's Investment Research.

According to preliminary calculations, the Dow rose 176.72, or 1.45 percent, to 12,383.89 by late afternoon after falling as many as 95 points in morning trading. On Friday, the blue chip index tumbled 171 points after a two-day advance of more than 400 points.

Broader stock indicators also advanced Monday. The Standard & Poor's 500 index rose 23.36 or 1.76 percent, to 1,353.97, while the Nasdaq composite index rose 23.71, or 1.02 percent, to 2,349.91.

Government bond prices slipped as stocks rose. The 10-year Treasury note's yield, which moves opposite its price, was at 3.59 percent, up from 3.58 percent last Friday.

Alexander Paris, economist and market analyst for Chicago-based Barrington Research, said most investors were waiting for the Fed to announce its decision on Wednesday before making any big bets. That was one of the reason for a quiet trading day where the Dow stayed mostly in positive territory.

"It was calmer than I expected it would be, especially when you have lots of news for investors to look at," he said. "But, it's the Fed offsetting the news - and people don't want to make a big move when you don't know what they're going to do about interest rates."

However, trading for the week is expected to be volatile as Wall Street digests President Bush's final State of the Union address Monday evening and the Fed's rate announcement Wednesday. Last Tuesday, in an emergency move, the Fed lowered rates by 0.75 of a percentage point.

Hopes for another large cut on Wednesday had been tempered late last week by news that French bank Societe Generale sold European index futures to close positions taken by an alleged rogue trader. It is thought those trades may have aggravated the massive losses in Europe and Asian trading last Monday, when the U.S. markets were closed.

Profit reports Monday were ostensibly upbeat, but revealed some troubling signals about the economy. Fast food seller McDonald's, a Dow component, said its quarterly profit rose 3 percent due to tax benefits and strong sales, but December U.S. sales were flat with a year ago as cash-strapped consumers pared back spending. McDonald's shares fell $3.03, or 5.6 percent, to $51.07.

Merger and acquisition news added to the market's uncertainty. Blackstone Group LP on Monday said it is still interested in buying Alliance Data Systems Corp., but that the $6.4 billion deal is in jeopardy because regulators want to place onerous terms on the takeover. ADS dropped $23.12, or 35 percent, to $42.48. Blackstone slipped 21 cents to $19.15.

The dollar fell against most major currencies except the yen, and gold prices rose.

Crude oil rose 28 cents to settle at $90.99 a barrel on the New York Mercantile Exchange.

Advancing issues outnumbered decliners by nearly 3 to 1 on the New York Stock Exchange, but volume was a relatively low 1.39 billion shares.

The Russell 2000 index of smaller companies rose 13.79, or 2.00 percent, to 702.39.

Asian trading saw steep losses - in Tokyo, the Nikkei stock average dropped 4 percent and a key index in Shanghai plunged 7.2 percent. In Europe, London's FTSE 100 fell 1.36 percent, Frankfurt's DAX rose 0.03 percent and Paris's CAC 40 lost 0.61 percent.

[gslinger3]

The housing market has been overinflated for years. Are people that blind that they did not see that a correction was bound to happen? This should be of no suprise to any economist with even the most basic knowlege of his trade.

[mcvet]

Down down we good... I guess the "Trickle Down" the fascist promised us will have to wait another 30 years of so. I just wonder when they intend to Balance the Federal Budget. These frauds don''t even mention a Balanced Budget anymore when they were all for an AMENDMENT a few years back. ROFLMAO Anyone still buying this trash?? Sieg Heil Bush!

[micma-2009]

Worst home sales on record, worst deficits on record, worst President on record...wow it''s a trifecta!

[missingamerica]

I bet what is really burning the "trickle down free traders" (TDFT), though, is the world markets'' reactions.

The TDFT go to all this trouble to get things set up where they can treat the labor/consumers in any one country like *** in order to suppress labor costs while safekeeping their money in a different country''s stock market, and the whole world''s markets have been going down.

Yah, I''m giggling...

[random_radar]

Subprime borrowers are defined as people you shouldn''t loan money to. So why the surprise that they can''t pay their loans? Even subprime borrowers should be smart enough not to invest money in banks that would give them a loan.

Optimism is the mainspring of economic collapse.

[missingamerica]

The stock market is going back up. You reckon it is a positive sign, or just some of the big money trying to stop a fire sale?

[omega39-2009]

when the banking industry develops a 1 year affordable housing loan, things will improve. A one year commitment or less is all the American worker can pledge from his new temporary job.

[inventagod]

This housing market could easily be seen coming, real estate agents overvalued homes for years, and greedy homeowners pushed for unreasonable gains. Larger commissions for the agents is nothing but greed. The cycle will always repeat...

[nyckate]

Wow - BushEconomics kicking in big time - bet the little sob prayed really really hard that it wouldn''t to bust till he was out of office - cause you know with georgie it''s never georgie''s fault.

WHat the housing/banking mess proves once more is that the corporations and businesses CANNOT be relied upon to self-regulate. We NEED active federal regulators overseeing banking and corporations - its the only way to keep them half-way honest.

[nyckate]

gslinger3

THen why didn''t Bush Economists see this coming? Cause they like their theory that businesses will regulate themselves. Cause they like their corporate sponsors raking in all the dough they can get their mitts on - whether its legal or not.

[rushlimpdrug]

"Worst Sales Of New Homes On Record"

Yeah, but the cardboard homes sales are skyrocketing!

[nyckate]

random_radar

The old axiom was that banks would never lend you what your financial situation didn''t allow you to repay.

The sub-prime mess is just that a gigantic mess - in that mess are working class folk who really didn''t understand what they were signing, to business class folks who knew they were being paid to take these mortgages to investors who ripped off the system. The ones who won''t get the help are the more honest ones - teh ones who clean hospital rooms for a living.

[Krazcarl]

Let''s get honest thanks to Bush were lucky to pay the rent who can afford a new home only the wealthy.

[newsjunky5]

Is Neil Bush back in the Savings and Loan business again? Remember the last time he harvested this sector?

[ioweign]

The housing market has been overinflated for years. Are people that blind that they did not see that a correction was bound to happen? This should be of no suprise to any economist with even the most basic knowlege of his trade.

Posted by gslinger3 at 11:11 AM : Jan 28, 2008

Why wait so long to step in with a "stimulus" then ?

Because Fed spending to states is way down - local property taxes are sky high based on this artificial high price - "No Child Left Behind" is now "No Child Gets a Dime"

[olebd]

I''m sure there''s still plenty of FEMA trailers to go around.

[easeup-2009]

If any of you are renting right now it is a prime time to buy. Lowball the *** out of someone & get a steal.

[one_american]

"Worst Sales Of New Homes On Record"?

So what. The market is temporarily saturated.

And 1% growth, along with only a mere 5% unemployment is NOT A RECESSION.

The liberal media want it to be a recession, but it is not the truth - only a hollow liberal rant.

Liberals are still losing their War Against America.

[mineralsd]

Houses were way over priced especially in California and Florida. The blame has to go on the buyers and the banks and mortgage companies who financed them. They got themselves into this mess. Let them get themselves out! Feds lower interest rates so people can buy more on credit and dig the hole deeper.

[rushlimpdrug]

Liberals are still losing their War Against America.
Posted by One_American at 12:35 PM

1. You''re STUPID.
2. Although I don''t consider myself a liberal, I would venture to say most liberals love their country, U.S.A., more than you hate them.

[l00ker]

All, brought to you, courtesy of Hillary''s buddy Rubin ( Goldman Sachs ) and his buddies on Wall Street, with their SIV and CDO witchcraft, and other assorted bile of financial sorcery. One can only wonder, how much of those huge bank fees charged on those mortgage securities, ended up in ole Hill''s campaign coffers. Business as usual, starting early it appears.

[joyous88]

This was brought to you by the conservative agenda, and the mindless christian voters,

GW Bush and his criminal pals created this economy, no one else

[terrapin78]

I bet after the sub-prime mess is over, there will be LESS Homeowners than when the Chimp and cronies took office!

Another feather in the Bu$h dunce cap!

[clestes-2009]

Thank you, thank you shrub admin for making the lives of millions of people around the world worse than they thought it could be.

My list of thank yous is endless. You are responsible for 3900 US troops dead, 25,000 wounded. hundreds of thousand dead civilians, million of displaced civilians, helping Iran to rise to preeminance in the middle east, and lest I forget, bankrupting US economy!

I could go on with thank yous but instead I offer this website for 100 reasons to thank you.

http://www.americanprogress.org/issues/2004/05/b64326.html.

[pollroller1]

olebd said I''''m sure there''''s still plenty of FEMA trailers to go around.
Now that''s funny. LOL

[djberson]

Go ahead builders and developers... build some more. Just keep building and building. And don''t forget to use the cheapest possible building materials while you are at it.

[walt1944-2009]

In his annual, possibly his last (it is hoped!) State of the Union speech tonight, the Great Emperor Bush II will tell the country that there is NO recession and that, as the Neocon media has been saying, it is all a figment of our imaginations!

However, to settle down markets abroad (and prevent the Chinese and Europeans from calling in their loans against the US(SA)!), the Great Emperor Bush will "persuade" Congress to give every wage earner (the poor, unemployed people, and retirees don''t count!) a "rebate" of $600 to spend as fast as they get it!

In this way, the economy of the US(SA) will be "stimulated", the stock markets here and around the world won''t "CRASH", business profits will be UP, highly paid corporate executives won''t have to worry about their huge paychecks "bouncing" and neither will stockholders have to worry about smaller dividends, and the wealthy can continue to enjoy the "American Dream"!

Of course, the Great Emperor will not mention in his speech that he expects to get that "rebate" money back as he did with the last "rebate", but ordering the IRS to collect income taxes on it!!!

HA! HA! HA!

SIG HEIL, BUSH!!!!!

[sal567]

The government should make all lenders work with their borrowers to keep their homes whether they are holding adjustable rate mortgages (ARM''s) or fixed mortgages. My lender wouldn''t work with me to lower my mortgage because I do not have an ARM but I''m still paying 11% and 7% on a 20-80 financing and it''s eating up all my income. I cannot get a refi because my home was devalued by 20% with 0 equity, it''s now worth much less than what I paid for! My whole paycheck goes to pay the mortgage and I don''t have any left for food and utilities. I''m afraid it won''t be long before I too join the foreclosure bandwagon and both my lender and I will be the losers. I''m struggling to keep my home but I''m sure I''m not alone - I know there are many out there who need the government to step in and help borrowers like me who were caught in this mess. These greedy lenders should be compelled to work with us to reduce their stiff interest rates so we can keep our homes!

[hypnotoad72]

1980 - folks, note: Reagan''s tensure started in January, 1981.

And for once I''ll side with Bush. The more the mainstream media says "the sky is falling", the more people who watch it will blindly believe it. And then the spiral begins.

Besides, I''m ***-**** tired of being worried. I''m going to freakin'' live and hope for a while. Bush is not exactly to blame for the economy.

[ioweign]

Worst Sales Of New Homes On Record"?

So what. The market is temporarily saturated.

And 1% growth, along with only a mere 5% unemployment is NOT A RECESSION.

The liberal media want it to be a recession, but it is not the truth - only a hollow liberal rant.

Liberals are still losing their War Against America.


Posted by One_American at 12:35 PM : Jan 28, 2008



Where is Neil Bush ??

In 2004, Bush took credit for this growth and now we see that it too was based on false housing data. And you want to blame liberals ! DUH

[fstop100]

Right on the rich get richer

[joyous88]

Bush and the immoral conservative agenda are ruining our country

[myidoncbs]

someone thinks that "Bush is not exactly to blame for the economy."

Really? For the past 7 years, Bush has wiped out the huge surplus from the Clinton years, created the largest debt in this country''s history, borrowed and spent, borrowed and spent, borrowed and spent..., bringing this country to the edge of insolvancy, and during this time he has been pushing FEAR: the boogeymen (terrorists) are out to get us! Be afraid, be VERY afraid, but trust in Bush (the guy who should have protected us from 9/11 but did not) to save us all from the boogeymen! THIS IS NOT THE KIND OF ENVIRONMENT THAT LEADS TO ECONOMIC PROSPERITY!

So, yes indeed, Bush absolutely IS to blame for this mess.

[jjloveyaya]

Go ahead builders and developers... build some more. Just keep building and building. And don''''t forget to use the cheapest possible building materials while you are at it.

[jjloveyaya]

Go ahead builders and developers... build some more. Just keep building and building. And don''''t forget to use the cheapest possible building materials while you are at it.
---------------------------------
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[denn034]

If homes are going for $299,900 in Utah, then, what must they be going for elsewhere? Is it any wonder homes sales have fallen? Add to that the sub-prime loan mess and something most definitely needs to be done to lower the costs of homes.

[mcvet]

If homes are going for $299,900 in Utah, then, what must they be going for elsewhere? Is it any wonder homes sales have fallen? Add to that the sub-prime loan mess and something most definitely needs to be done to lower the costs of homes.


--------------------------------------------------------------------------------

Posted by denn034 at 02:54 PM : Jan 28, 2008
+ report abuse

ROFLMAO It''s tough being a good Nazi these days isn''t it? ROFLMAO Down down we go... Guess all that money you freaks gave away, the debt that''s costing us BILLIONS to support and the regulations taken off of slimy lending associations is coming home isn''t it. To bad all that money that was supposed to have "Trickled Down" really went into the economy of Third World countries, we could sure us a little of it right now. Oh but never mind folks, stay the course!! ROFLMAO Sieg Heil Bush!!

[namesnames]

both of you libs and cons need to stop your whining. it is your self-righteous mentality that stifles this country. it is sickening.

[easeup-2009]

MCVet is the perfrct example of:

Bad for the country=good for libtards


I''ll bet he lies awake at night dreaming of a depression......

[buddhabman]

I only blame Bush in that he has wasted valuable resources by emeshing us in this non-necessary Iraq war. 300+ Billion could have built a bunch of roads, rails, bridges, schools, VA hospitals, provided education grants, upped teacher salaries. That money was needed here. We would have been better off giving each state 1 billion to improve it''s own security structure. Republican economic philosophy is woefully prepared for the new generation. Tricke-Down Voodoo Economics is dead. Move on Republicans. The sad thing is they have no other game plan and no talent to make adjustments.

[omega39-2009]

Besides, I''''m ***-**** tired of being worried. I''''m going to freakin'''' live and hope for a while. Bush is not exactly to blame for the economy.

Posted by hypnotoad72

You usually speak common sense but you are way off base on this one. When Bush was giving away taxcuts to his rich buddies, he was shelving a treasury report by Paul O''Neal warning about the consequences of the long term debt. For that reason and the unnecessary inflationary war and for his endless supply of free trade agreements with every third world nation, Bush is responsible.

[element51]

One_American....Could you please define "liberal" for me? This is a serious question, I''m not attacking you. I hear this term thrown around like it was a dirty word and I don''t quite understand. What exactly does a liberal believe in? Are there liberal republicans? How about independents? In what way are these "liberals" declaring war on America? I would really appreciate your clarification. Thanks.

[one_american]

"Worst Sales Of New Homes On Record"?

So what. The market is temporarily saturated.

And 1% growth, along with only a mere 5% unemployment is NOT A RECESSION.

The liberal media want it to be a recession, but it is not the truth - only a hollow liberal rant.

Liberals are still losing their War Against America.

And the stock market was UP today, CBS.

Get a clue.

[element51]

jjloveyaya....Hay you stupid plick!!!!Why don''t you go peddle your azz somewhere else? There are intelligent people on here trying to have conversation and we really don''t need some male hooker taking up space.

[jowand]

One_American....Could you please define "liberal" for me? This is a serious question, I''''m not attacking you. I hear this term thrown around like it was a dirty word and I don''''t quite understand. What exactly does a liberal believe in? Are there liberal republicans? How about independents? In what way are these "liberals" declaring war on America? I would really appreciate your clarification. Thanks.
Posted by Element51 at 04:13 PM : Jan 28, 2008

Depends if your using it a noun, or adjective????

[ioweign]

"Worst Sales Of New Homes On Record"?

So what. The market is temporarily saturated.

And 1% growth, along with only a mere 5% unemployment is NOT A RECESSION.

The liberal media want it to be a recession, but it is not the truth - only a hollow liberal rant.

Liberals are still losing their War Against America.

And the stock market was UP today, CBS.

Get a clue.

Posted by One_American at 04:21 PM : Jan 28, 2008

A Clue - Like 935 of them !


Study: "False Pretenses" Led U.S. To War
Journalism Groups'' Research Finds 935 False Statements By Bush Administration

[rudy654-2009]

Posted by jowand at 04:36 PM

Did you graduate high school, or was that too hard for you, maybe too "liberal"?

[one_american]

Study: "False Pretenses" Led U.S. To War
Journalism Groups'''' Research Finds 935 False Statements By Bush Administration

Posted by IOWEIGN at 04:42 PM : Jan 28, 2008


Paid for, as you well know, by George Soros, billionaire liberal activist.

And didn''t you get the memo? Saddam was the one who was lying, and everyone (including your liberal politicians) believed it, too.

You are losing your War on America, IOWEIGN.

[rudy654-2009]

Liberals are still losing their War Against America.Posted by One_American at 12:35 PM

I get it, you think Michael Savage, aka the Whiner, is the great prophet of your ignorance. How is it to get a disability check in the mail every week and just to be able to post all day?

[one_american]

How is it to get a disability check in the mail every week and just to be able to post all day?

Posted by rudy654 at 04:46 PM : Jan 28, 2008


I wouldn''t know. You sound like the expert there...