News

US Housing Market Shows Improvement

Multimedia

Major U.S. stock indexes are at their highest levels for the year following the U.S. Federal Reserve's improved economic outlook last week and a national report showing a big bump in home sales. The National Association of Realtors says sales of existing homes surged seven percent in July - the biggest monthly increase in more than ten years.  The good news has helped stoke hopes for an economic recovery. But the picture is not as rosy as it seems.

Sales of existing homes rose sharply in July, surpassing expectations and fueling optimism that the U.S. economy is on the right track. "Affordability is at an all-time high.  You have home prices that have dropped 25 to 30 percent.  You have interest rates at very low amounts and you have consumers who have been waiting to buy.  Combine that with the eight-thousand dollar tax credit you get if you're a first time buyer, and it's creating a solid demand," said Zip Realty's Patrick Lashinsky.

But the higher demand is just part of the larger picture. Although the increase was  the largest in ten years, average homeowners have lost about 15 percent of the value of their homes. 

Economist Mark Zandi says that's symptomatic of a bigger problem in the housing market. "House prices will continue to fall so long as foreclosures continue to mount, so we have to see and hopefully we will see that the president's loan modification plan to forestall the crisis, kicks in," he said.

But critics of the government's plan, aimed at helping struggling homeowners modify loans to make them more affordable, say fewer than ten percent of eligible loans have been changed. 

That means many homeowners  will continue paying high interest rates on loans worth more than their homes. 

Last month, more than 360,000 homeowners were foreclosed, an increase of more than 30 percent since last year. 

Zandi says part of the problem is that banks are still reluctant to lend. "Well, they're nervous, I mean unemployment is rising, house prices are still falling and as long as that continues, they're going to be reluctant to extend out credit," he said.

Realtors say the majority of homeowners who plan to stay in their homes need not worry. "If you are not looking to sell your house, don't get caught up in what the data says.  I think you can be confident it will get back to that price point and it will pass it.  Will it be in a year or two?  Probably not.  Within a five to seven-year horizon, I think that you'll be fine," Lashinsky said.

That's little comfort for an estimated four million homeowners who are struggling to make monthly payments. 

And with unemployment expected to peak next year, the worry is that foreclosures will continue to rise, making prospects for an economic recovery more elusive.

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Turkey's Main Opposition Party Hopes for Election Breakthroughi
X
May 22, 2015 10:23 AM
Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Turkey's Main Opposition Party Hopes for Election Breakthrough

Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Europe Follows US Lead in Tackling ‘Conflict Minerals’

Metals mined from conflict zones in places like the Democratic Republic of Congo are often sold by warlords to buy weapons. This week European lawmakers voted to force manufacturers to prove that their supply chains are not inadvertently fueling conflicts and human rights abuses. Henry Ridgwell reports from London.
Video

Video Class Tackles Questions of Race, Discrimination

Unrest in some U.S. cities is more than just a trending news item at Ladue Middle School in St. Louis, Missouri. As VOA’s Kane Farabaugh reports, it’s a focus of a multicultural studies class engaging students in wide-ranging discussions about racial tensions and police aggression.
Video

Video Mind-Controlled Prosthetics Are Getting Closer

Scientists and engineers are making substantial advances towards the ultimate goal in prosthetics – creation of limbs that can be controlled by the wearer’s mind. Thanks to sophisticated sensors capable of picking up the brain’s signals, an amputee in Iceland is literally bringing us one step closer to that goal. VOA’s George Putic reports.
Video

Video Afghan Economy Sinks As Foreign Troops Depart

As international troops prepare to leave Afghanistan, and many foreign aid groups follow, Afghans are grappling with how the exodus will affect the country's fragile economy. Ayesha Tanzeem reports from the Afghan capital, Kabul.
Video

Video Poverty, Ignorance Force Underage Girls Into Marriage

The recent marriage of a 17-year old Chechen girl to a local police chief who was 30 years older and already had a wife caused an outcry in Russia and beyond. The bride was reportedly forced to marry and her parents were intimidated into giving their consent. The union spotlighted yet again the plight of many underage girls in developing countries. Zlatica Hoke reports poverty, ignorance and fear are behind the practice, especially in Asia and Africa.
Video

Video South Korea Marks Gwangju Uprising Anniversary

South Korea this week marked the 35th anniversary of a protest that turned deadly. The Gwangju Uprising is credited with starting the country’s democratic revolution after it was violently quelled by South Korea’s former military rulers. But as Jason Strother reports, some observers worry that democracy has recently been eroded.
Video

Video California’s Water System Not Created To Handle Current Drought

The drought in California is moving into its fourth year. While the state's governor is mandating a reduction in urban water use, most of the water used in California is for agriculture. But both city dwellers and farmers are feeling the impact of the drought. Some experts say the state’s water system was not created to handle long periods of drought. Elizabeth Lee reports from Ventura County, an agricultural region just northwest of Los Angeles.
Video

Video How to Clone a Mammoth: The Science of De-Extinction

An international team of scientists has sequenced the complete genome of the woolly mammoth. Led by the Swedish Museum of Natural History in Stockholm, the work opens the door to recreate the huge herbivore, which last roamed the Earth 4,000 years ago. VOA’s Rosanne Skirble considers the science of de-extinction and its place on the planet
Video

Video Blind Boy Defines His Life with Music

Cole Moran was born blind. He also has cognitive delays and other birth defects. He has to learn everything by ear. Nevertheless, the 12-year-old has had an insatiable love for music since he was born. VOA’s June Soh introduces us to the young phenomenal harmonica player.

VOA Blogs