Transcripts

The Housing Sector is Doing Bad Things To People With Good Credit

JEFF YASTINE: Still no relief in sight for the housing market. New data out today show sales of existing homes continue to fall, and worries continue to rise over mortgage defaults. As Stephanie Dhue reports, that's a double whammy that has economists predicting the housing recession is far from over.

STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Tighter lending standards have made it harder for home buyers with weak credit to get loans. Economists blame those standards for pushing sales of existing homes to their lowest level in five years. Realtor Tim Uber has seen some buyers squeezed out of the market.

TIMOTHY UBER, REALTOR, LONG & FOSTER: Where before you could get 100 percent financing, you could get no-doc loans seven days a week, you really need to be able to have better credit and provide more documentation.

DHUE: The National Association of Realtors says existing home sales fell 3.8 percent in June. The realtors also report the median existing home price rose slightly to $230,100 last month. But economist Thomas Lawler says it would be a mistake to view that as a sign home prices are increasing.

THOMAS LAWLER, LAWLER ECONOMIC & HOUSING CONSULTING: The biggest impact in the mortgage credit tightening has been the lower priced, first time home buyer end of the market. And you figure if sales fall more at the low end than the high end, that the median will go up, but it won't go up because home prices are going up.

DHUE: In fact, the housing outlook is growing increasingly dim. Home builders are dropping prices and have reported steep sales declines this year. DR Horton, which reports fiscal third quarter earnings tomorrow, has already warned investors that sales orders dropped 40 percent. National Association of Homebuilders economist David Seiders has repeatedly slashed his forecast for home sales and housing starts this year.

DAVID SEIDERS, CHIEF ECONOMIST, NATIONAL ASSOCIATION OF HOMEBUILDERS: The key reason is this turmoil in the housing finance system, kicked off by the sub- prime debacle and now spreading, to some degree, into other components as well. This is really a big deal. It's given an extra added down leg to the housing correction process.

DHUE: A big worry now amidst the growing concern over credit is just how many more homes will come on the market from foreclosures. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.