As Economy Weakens, Resales Fall Again

Existing-homes sales totaled 4.91 million units in August on an annualized basis -- a 2.2% decline from the level recorded in July -- as mortgage financing became more expensive and Americans continued to worry about their jobs. According to figures compiled by the National Association of Realtors, resales fell 10.7% from the level of a year earlier. The bad news on home sales came as Federal Reserve Chairman Ben S. Bernanke told a joint committee of Congress that U.S. "economic activity appears to have decelerated broadly," adding that new unemployment claims "are at elevated levels." Noting that the national unemployment rate is now 6.1%, the Fed chairman added that "real after-tax income has fallen this year." Traditionally, mortgage lenders rely on strong employment to drive home sales. The NAR and other trade groups believe that the government's bailouts of Fannie Mae and Freddie Mac have already caused interest rates to fall, which will make home financing more affordable. "With higher [loan limits for the government-sponsored enterprises and the Federal Housing Administration] and a beefing up of the FHA program, all the mechanisms have been falling into place to increase mortgage availability," said NAR chief economist Lawrence Yun.