The housing market is recovering and then it isn’t. New data from Trulia says that Americans cut the prices on their homes by an aggregate of $27.8 billion in the year ending August 1.
The media home price dropped more than 15% to $174,100 in the second quarter. It should come as no surprise that Nevada and Florida were hit hard. Prices are also collapsing in Connecticut, Massachusetts, and Rhode Island.
The news comes on the heels of a report from Zillow that home values posted their 10th consecutive quarterly drop in prices.
Since the decline in the housing market has multiple causes, it may need multiple solutions. Foreclosures are up and the government program to drop monthly payments is hampered because so many mortgages are underwater.
Another contributing factor is rising mortgage rates. This is caused, at least in part, by the Treasury’s heavy borrowing in the capital markets to fund the US deficit.
None of the data on housing that has come out in the last week would allow sellers to hold out any hope that the market will improve in the next several quarters, and buyers are still afraid that mortgage rates are increasing the cost of owning a house while home prices keep dropping.
Douglas A. McIntyre
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