Economy flashes signs of weakness in prices, housing

Declines in construction last month were led by a 31% drop in the Northeast, where construction of single family homes fell to a new low. They also dropped 13.7% in the Midwest, but rose 7.5% in the West and a 1.5% in the South.

Applications for home mortgages declined last week, with loans for purchases of single-family homes falling to their lowest level in nearly eight years, an industry group reported.

The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage application activity fell 6.2% to 398.6 the week ended Nov. 14.

The index was dragged lower as the MBA's gauge of loan requests earmarked for home purchases tumbled 12.6% to 248.5, lowest since the last week of December 2000.

The index for refinancing applications edged higher to 1,281.2 from 1,248.4 the previous week.

The housing slump, now in its third year, will likely linger as long as the mix of falling home prices and shaky mortgages keep foreclosure rates rising, economists say. The financial markets crisis that erupted in September and October has worsened the outlook, leading banks to pull back on already tight credit for mortgages and other loans.

The average rate for traditional, 30-year fixed-rate mortgages slid to 6.16% from 6.24% in the MBA survey. The average rate for 15-year fixed-rate mortgages, often a popular option for refinancing a home, slipped to 5.87% from 5.90%.

The average rate for one-year adjustable-rate mortgages increased to 6.8% from 6.77%.

Contributing: Sue Kirchhoff of USA TODAY; Associated Press, Reuters

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