Home-supply glut pushes stocks lower

The slumping housing market helped drive the stock market lower today.The National Association of Realtors reported this morning that the supply of homes and condominiums for sale — measured in months’ supply — was the largest in 16 years.

The news ended whatever hope investors had for a continuation of Friday’s rally. The Dow Jones industrials finished the day down just under 57 points, 0.4%, to 13,322. The Nasdaq Composite Index was off 15 points, 0.6%, to 2,561, and the Standard & Poor’s 500 Index slipped 12.6 points, 0.9%, to 1,467.

The best news was that the declines were decidedly modest. The worst thing about the report of growing inventories of unsold homes was that it didn’t reflect the effect of the credit crunch on the housing market.

There have been increasing reports around the country that the credit crunch has stalled — if not killed — home sales in many markets, as buyers have found that mortgage financing isn’t available. That market reality won’t appear until next month when the Realtors group reports sales for August.

Home prices drop for fourth straight quarter

NEW YORK (CNNMoney.com) — The price of a typical home in the United States continues to drop but at a slower pace, according to a new survey.

During the second quarter, the median single-family home price was $223,800, 1.5 percent less than a year ago, according to the National Association of Realtors (NAR). It was the fourth consecutive quarter of price declines. Condo prices rose 1 percent to a median of $226,800.

Homebuilders’ confidence at 16-year low

NEW YORK (CNNMoney.com) — Builders’ confidence in the new home market fell to a 16-year low, according to a trade group survey conducted this month which reports buyers’ problems finding financing spreading beyond the subprime sector.

The National Association of Home Builders/Wells Fargo Housing Market Index fell two more points to a reading of 22, the lowest level since January 1991, when the nation was struggling with a recession, an energy price shock and the start of the first Gulf War. Any reading below 50 indicates more builders view sales conditions as poor than as good.

Even the Smallest of Loans Has a Price

Providing small loans at affordable prices has always been a challenge. The problem is that the cost of originating and servicing a loan is much the same for a small loan as for a large one, but the interest return, based on the loan amount, is smaller on the smaller loan. The obvious remedy, a higher interest rate on the smaller loan, makes it costly and perhaps unaffordable.

The price sheets of lenders in the United States generally show higher first-mortgage rates on smaller loans, with minimum sizes ranging from $50,000 to $75,000.

Who needs a mortgage of less than $50,000? For one, people who live in communities where houses are inexpensive.

“In my town, we need mortgage loans from $5,000 to $30,000, and they just aren’t available. Is there anything that can be done?” a reader wrote.

The town is Winters, Tex., population about 3,000, most of them retirees. There are few jobs anywhere close, and houses sell for less than $60,000.

Riskiest U.S. Housing Markets

(From Forbes.com) 

Those looking to spin the real estate roulette wheel might want to steer clear of Miami. It ranks first on our list of the nation’s riskiest real estate markets.

There, a high share of adjustable-rate mortgages, high vacancy rates and slumping prices still too elevated for the local populous means should long-term bond yields climb, interest rates jump or the housing crisis linger much longer, things could go from bad to worse.

Affairs are not much better farther north–or west. Following in Miami’s wake are Orlando, Sacramento and San Francisco.

Our ranking of the country’s riskiest markets measures which of the 40 largest metros are most vulnerable to future shocks. We’ve done this by assessing which have the most strained lending conditions, and which markets are the most overvalued and likely to face downward price pressures.