Worse than expected sales of new homes

December 30

The housing market had been showing signs of slowdown since last 12 months but it has been significantly plunged deeper into last month, with sales of new homes plunging to their lowest level.

The slowdown in housing market has worsened in November even more than most analysts expected, intensifying uncertainties that the US economy may be propel into a recession.

Housing market had been a worse performer in year 2006-2007 following a significant five years rally of record-breaking movement from 2001 through 2005. The boom-to-bust situation has increased dangers to the economy as a whole and has been especially hard on some homeowners. New-home sales tumbled 9% in the month of November from October to a seasonally adjusted annual sales pace of 647,000 as per the Commerce Department reported Friday. That was the worst sales pace since April 1995.

According to many economists the worse performance of housing market will still continue in the coming year of 2008 and probably will keep rising. The crises in housing and mortgage market meltdown have lifted the probability that the country will fall into a recession.

Wall Street ended with an unpredictable week hardly mixed Friday after a government report of a sharp decline in new home sales stimulated fear that weakness in housing will keep on to afflict the economy. The major indexes lost ground for the week. The Dow Jones industrials, following an unpredictable session, managed to grasp out a small gain even as the bleak home sales report fueled to some stock market investors' angst. The Dow closed marginally up 6.26 points at 13,365.87.

Regardless of months of volatile stock trading sessions that has seen stocks surge and then relapse, the major indexes are going into the final trading session of 2007 with decent gains: The Dow is up 902.72, or 7.24%, while the S&P 500 is up 60.19, or 4.24 % and the Nasdaq is up 259.17, or 10.73%.

Worst development of housing and credit market had increase the concern of stock market investor as many believes 2008 will be tough year for stock market.