Though tragic, last week’s unfortunate assassination of former Pakistan Prime Minister Benazir Bhutto created only a minor ripple in stock and bond markets. Housing was again the more pressing concern. On that sinking front, home prices in 10 major metropolitan areas in October were down 6.7% from a year earlier, according to the S&P/Case-Shiller home-price indexes. The decline exceeded the previous record year-to-year decline of 6.3% in April 1991, when the economy was emerging from a recession. Meanwhile, sales of new homes continued on their downward spiral, falling to a 12-year low in November. Specifically, purchases tanked 9% to an annual pace of 647,000, which exceeded even the lowest estimate. The continued slowdown in home sales is also taking a toll on mortgage demand, with mortgage-application activity – both refinance and purchase – recently posting at the lowest level of the year, according to the Mortgage Bankers Association.
Eric P. Egeland