Housing Slump Acccelerating

That’s according to a report in the San Francisco Chronicle:

Bad news came in threes for the real estate industry Tuesday as two nationwide economic reports and one from California showed the housing slump is accelerating. California home sales plunged nearly 30 percent last month compared with August 2006 and median prices dropped by almost 14 percent in the High Desert area and part of Santa Barbara County, the California Association of Realtors said Tuesday.

In the Bay Area, sales of existing homes dropped 26.5 percent in the same time period, but, because of more sales at the higher end of the market, the median price of a single-family home actually rose 9.9 percent from August 2006, to $832,760. That was down about 1.1 percent from July’s median of $841,660. For the entire state, the median price edged up 2 percent to $588,970. But analysts at the trade group pointed out that prices were weak in nine geographic regions and at the lower end of the market. The median price of an entry-level home – anything less $500,000 in California – dropped 5.1 percent in August to $349,360.

In addition, the inventory of unsold homes was 11.8 months in August, compared with 5.9 months in August 2006. The figure represents the number of months it would take to sell all the homes currently on the market. “The credit crunch emerged as uncertainty about the extent of the subprime problem drove investors across the globe to turn off the tap of funds to lenders in mortgage and other credit market segments. With credit drying up, even qualified buyers were unable to receive funding for home purchases,” Leslie Appleton-Young, the trade group’s chief economist, said in a news release…

Some economists warned that even worse news could be ahead because of the financial market turbulence in August. “August’s sales do not reflect the full impact of the credit crunch, which hit financial markets in mid-month, since most sales were financed with loans approved weeks beforehand,” said Patrick Newport, an economist at Global Insight.