American Housing Market in further Decline

The number of house sales in US fell 2.6 per cent in the year to April 2007. There is now a backlog of homes not being sold; supply is greater than demand. The average selling price for homeowners who do find a buyer has also started to fall.

There is little evidence that the worst of the US housing market recession is over. The collapse in the sub prime market means that banks and building societies are no longer lending to people with bad credit histories. This is a big chunk of the market.

Furthermore, many with existing mortgage deals will soon becoming to the end of their introductory rates, therefore, in a few months there will be an increasing number of people who struggle to meet their mortgage payments. Many mortgage experts predict a continued rise in the number of home repossession.

There are concerns the recession in the US housing market may be mirrored in the UK. Although, house prices in the UK had a similar exponential rise, at the moment demand is still greater than supply. Also, the sub prime market in the UK is much smaller.



Anonymous James said...

The type of loan that most middle class people borrow in the US is called an "Adjustible or Variable Rate" mortgage where the monthly interest rate fluctuates with that set by the Federal Reserve... therefore when the Feds want to slow down the American economy, they will increase the interest rates, that will in turn make a lot of people find it difficult to keep up with their mortgage payments.

Check out my blog Debt Consolidation to learn more.

June 11, 2007 at 3:53 PM  

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