New Home Sales Dropping

New-home sales is more bad news, Hampel tells media

WASHINGTON (6/28/07)--New-home sales fell in May for the fourth time in the past five months and mortgage rates are rising, and that's not good news, according to Bill Hampel, chief economist with the Credit Union National Association (CUNA).

Associated Press, CNN/Money and Bloomberg News reported Hampel's analysis on the slump in the housing market Tuesday.

Rates for 30-year mortgages have risen by one-half percentage point in recent weeks to 6.69%, meaning the maximum mortgage a borrower can qualify for is 5% lower.

"That is more bad news for an already fragile market," Hampel said in the Associated Press article. He was the only financial institution industry representative interviewed.

While the bad news from the housing sector is not a surprise, it is a sign that no improvement is on the horizon, said the CNN/Money article.

"We're just in the early stages of the decline in housing," Hampel told CNN/Money, adding that the recent rise in mortgage and other interest rates will only make a bad situation worse.

"It's going to be moribund through the rest of this year to late next year," Hampel said. "It's not going to plummet. But it's going to get weaker month-to-month, and probably bottom out late this year or early next."

In the Bloomberg News article, Hampel said, "The strong headwinds haven't abated at all. Tightening mortgage credit, coupled with affordability issues, will slow the recovery."

courtesy of cuna.org