Good Time To Buy A Home As Prices Fall and Existing Home Sales Decline â€" SubPrime Lenders And Bad Weather Blamed For Problems

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(Best Syndication) The decrease in the subprime lending volume and bad weather has contributed to steepest one-month decline in sales of existing homes in nearly two decades. The National Association of Realtors (NAR) says that after rising for three consecutive months, total existing-home sales fell 8.4 percent to a seasonally adjusted annual rate1 of 6.12 million units in March.

These existing homes include single-family residences, townhomes, condominiums and co-ops. David Lereah, an economist for the NAR says “For the last couple months we’ve been expecting a weather ‘hit’ on home sales finalized in March, but looking at overall activity in the first quarter we see that existing home sales averaged 6.41 million â€" a figure that is moderately higher than the sales pace during the second half of 2006.â€�

This is a good time to buy a home according to NAR President Pat Vredevoogd Combs. “It’s a good time to buy, in part, because home buyers are not pressured to make quick decisions,� Combs said. “We’re in a window of low interest rates with a plentiful supply homes on the market and flat prices in most areas. First-time buyers now have more power to negotiate with sellers for help on down-payment or closing costs.�

The real estate market has been red hot for several years now, but hit a slight slowdown last year. The downturn was especially damaging to the subprime lending market. Subprime lenders were offering special loans to people with bad credit (usually to people with a credit score of 660 or lower). These loans were made at a higher interest rate.

Since the rate was incredibly high, the loans could be sold quickly for a profit. Beginning in late 2006, the U.S. subprime mortgage industry entered what many observers have begun to refer to as a meltdown. As housing prices fell, defaults rose.

Some blame the red-hot over-inflated real estate prices with the ease with which subprime borrowers could get credit. Housing prices increased because credit was easier to get, even for those with poor credit scores. These borrowers were stuck with large payments as their home values declined late last year.

The meltdown in the subprime market has sent a ripple effect through the lending industry. The association forecasts that the median home price will drop about 1.1 percent for all of 2007. This could be the first year-long decline on record.

By Dan Wilson
Best Syndication Writer

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