Housing News

US Economy: The October That Was

Gloomy economicsThe past month beckoned an unsteady tide in real estate with rough sailing in the economy.

Gloomy economic figures and the result of the presidential elections can shape the markets in the coming weeks before the holidays. Last month’s “dismal performance” in the Dow Jones industrial average and S&P 50 was brought about by fears in the susceptibility of financial firms to bankruptcy and the still indefinable fate of the subprime mortgage industry. October was the worst month for the Standard & Poor’s index of 500 stocks in 21 years.

Questions regarding the future of the housing industry still remain. September’s increase in sales of single-family homes was a welcome respite to the unending debate on when market prices will hit bottom. Yet in a report by The New York Times, analysts agree that more houses are likely to be on sale, adding pressure to median prices.

Still unable to recuperate from a series of falling home prices, Las Vegas (-30.6 percent) and Phoenix (-30.7 percent) continue to suffer from the crisis with significant annual reductions. Charlotte (-2.8 percent) and Dallas (-2.7 percent) show no signs of heavy effects with minimal fluctuations on the other hand. The 20-city Composite Index fell by -16.6 percent since last year.

Meanwhile, the Bureau of Labor Statistics reports that September’s unemployment rate remains at 6.1 percent. It is inevitable that in the coming weeks, the federal government will acknowledge that the country is already in a recession.

The connections to the property sector are not complex – downbeat economic figures lead to investor fears in the market which then curtails firms’ normal operations due to lack of capital. This leads directly to massive layoffs in the job market and spikes in the unemployment rate, which influence people’s spending habits. Their decisions to fold their wallets and cut back on major expenses sustain the glut of homes available in the market as tighter credit to finance their mortgage will be even more impossible.

We’ll have to see how the property market reacts with the election of a new president. Whatever happens, one thing’s for sure: The stock market will rally in the coming weeks. It’s a clear pattern for bullishness when investors are in the frenzy of promises that the winning candidate pledges to fulfill.

Show More

Related Articles

Check Also
Close
Back to top button
Close
Close