Finances

:: FINANCIAL TIP OF THE MONTH ::

 

 

With home sales falling, the inventory of unsold homes rose by 1.9 percent to 4.45 million units. Analysts said the backlog was about double what it is during normal times, and would likely rise further as a rising mortgage defaults in coming months dump more homes on the already glutted market.

 

Patrick Newport, an economist at Global Insight, predicted that home sales could decline another 10 percent from the current depressed levels by mid-2008. He said by the time he believes home prices will have fallen sufficiently to trigger a sales rebound.

 

By region of the country, existing home sales were unchanged in the Northeast and the South and down by 1.7 percent in the availability of jumbo loans.

 

The big drop in the West reflected the fact that the market for so-called "jumbo mortgages," loans higher than $417,000, tightened considerably last summer. California, with its high home prices, depends heavily on the availability of jumbo loans.

 

While economic growth roared ahead at a rate approaching 5 percent in the summer, many economists believe growth has slowed dramatically in the corner quarter from the combined blows of the most severe housing slump in more than two decades, the credit crunch and rising energy prices.

 

The government will release its latest look at the overall economic activity soon and it is expected to show growth at an annual rate of around 4.9 percent in the July-September quarter. However, growth in the current October-December period is expected to slump to a barely discernible 1.5 percent or even less.