Existing homes value drops 1.4%

The housing sector continued to slide, as home prices stumbled in October and mortgage applications dropped last week. Prices of existing single-family homes slumped for the tenth consecutive month in October, according to data from the Standard and Poor’s/Case-Shiller Home Price Indices. Prices decreased by 6.1% from October 2006 in 20 major cities, including Boston, Tampa and Los Angeles. On a monthly basis, prices decreased 1.4% in October, the most rapid rate of decline in seven years. Meanwhile, the Mortgage Bankers’ Association’s mortgage application index fell to 394.5 for the week of Dec. 21, down from 422.2 in the week prior. It doesn’t bode well for the sector. “We’re overbuilt by at least one million units nationwide,” said William Conerly, principal of Conerly Consulting LLC in Lake Oswego, Ore. “However, it’s worth noting that there’s a lot of variety in geography: Florida looks lousy, but the Pacific Northwest looks decent.” Mr. Conerly predicts a slow year for housing starts and prices, but says the sector isn’t large enough to pull the economy into a recession. On the other hand, new orders for manufactured durable goods rose 0.1% in November, according to data from the U.S. Census Bureau. This is the first increase in three consecutive months, but it was below the market consensus of 3.0%. Exclusive of defense, new orders rose 1.2%, but inventories also rose to their highest levels, jumping 0.8% to $317.2 billion.