New Home Sales Rise
A report released today by the U.S Department of Commerce reported an unexpected increase in new home sales for the month of September. This gain comes on the heels of the lowest home-sales pace in more than a decade.
Sales rose 4.8 percent from last month, which equals about 777,000 homes, according to the report. In August, the report showed 735,000 home sales – the slowest sales pace in nearly 11 years.
The news is encouraging, however, even with the 4.8 percent increase, sales are still 23.3 percent lower than this time last year. The housing market is still in a steep downturn, but for the moment, it seems that hope of a housing market recovery is a possibility.
The decline of the subprime mortgage surge proved nearly fatal to the mortgage industry earlier this year. Some subprime lenders have gone bankrupt, and even some of the big boys on the block like Countrywide seemingly neared insolvency as well.
Most experts put the blame on subprime mortgages themselves. Granting mortgages to applicants whose credit histories indicate they will not have the means to repay proved to be the downfall of lenders. Loan candidates were given higher interest rates or adjustable-rate mortgages to make up for the risk. However, the logic seems shaky that someone who cannot afford to repay the principal could also repay exorbitant interest.
At the end of August, with the subprime bust at its height, President Bush announced federal aid would be given for at-risk homeowners with risky mortgages. The Federal Housing Administration confirmed this and stated that about 240,000 homeowners would be aided. While this is helpful for those families, it is unclear how the proposal will affect the some 2 million homeowners who are subject to interest rate increases over the next year.
The credit crunch affects Americans in every aspect of credit in their lives. It is not only mortgages. According to CNN Money, the average American household has $9,200 in credit card debt. For years, people in debt have turned to debt consolidation to ease their troubles, usually using a home equity loan to settle their credit card debt. However, with the downturn of the mortgage industry, it is becoming increasingly difficult to acquire such loans.
Author Bio: Allison Roberts is a graduate of the University of North Texas Department of Journalism. She has experience in agency and in freelance public relations. Allison currently writes for Credit Solutions and she is completing an unfinished work of her late grandfather. For more articles by Allison on debt consolidation visit Credit Solutions.
