Sales of new one-family houses in October 2008 were at a seasonally adjusted annual rate of 433,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 5.3 percent (±15.0%)* below the revised September of 457,000 and is 40.1 percent (±9.9%) below the October 2007 estimate of 723,000. The median sales price of new houses sold in October 2008 was $218,000; the average sales price was $272,300. The seasonally adjusted estimate of new houses for sale at the end of October was 381,000. This represents a supply of 11.1 months at the current sales rate.

U.S. mortgage rates fell more than three-quarters of a percentage point today after the Federal Reserve said it will buy as much as $600 billion of debt.  The average U.S. rate for a 30-year fixed mortgage ended the day at about 5.5 percent after falling to as low as 5.25 percent, according to Bankrate Inc.

That is some serious good news!

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JP Morgan launched an ambitious plan Friday to modify the terms of $70 billion in mortgages for borrowers who are behind on their payments or soon could be. The move by the New York bank will cover as many as 400,000 borrowers. They'll be moved into loans carrying lower interest rates, smaller principal amounts or other more-affordable terms. The changes will particularly focus on a type of loan structured in such a way that the borrower's outstanding balance sometimes grows month after month. J.P. Morgan inherited $54 billion of such loans with its takeover of the beleaguered thrift Washington Mutual Inc. in September.

This is one of several plans in the works to assist homeowners nationally. While this may not affect Maui directly it clearly will help the national market.

• First on the general economy. If we weren't sure? We are now. The recession is here. If the economy shrank .3% in the quarter ended September?  Then it isn't going to improve between now and December given the fallout from the financial trainwreck in October;
• The Federal Reserve has cut the Fed Funds rate to 1% from 1.5%, citing declining consumer spending;
• Wells Fargo has completed their sale of $25 billion in preferred stock to the US Treasury;
• The credit markets continue to creep, and we mean creep, into improvement but no significant improvements as of yet;

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Data through August 2008 released by Standard and Poor's for its S&P/Case-Shiller Home Price Indices, the leading measure of US home prices, shows continued broad based declines in the prices of existing single family homes across the United States.

What the press release doesn't go into is a very interesting phenomenon in markets Maui property owners would care about. In markets like Los Angeles, Seattle and Denver, the rate of price declines slowed in August. What do we mean. Well in Los Angeles for example the August monthly decline was 1.8%. Multiply that by 12 for an annual decline and you get 21.6%. A terrible number, but better than the last twelve month decline of 26.7%. In other words the rate of decline is slowing. A speck of good news anyway. Now to be fair, this sales data all came in advance of the October financial markets meltdown. For details, contact us.

Southern California home sales shot up by an unprecedented 65 percent last month from the dismal, record lows of a year ago, when a credit crunch slammed the brakes on home financing. September sales also posted a rare gain over August as price cuts lured more buyers. Foreclosure resales rose to half of all transactions…"You have to view last month's sales in the proper context," he cautioned. "They represent escrow closings, which reflect purchase decisions made in mid-to-late summer. That was before the dramatic worsening of the nation's economic crisis in recent weeks. Over the next few weeks our sales data will begin to show how the meltdown in financial markets this fall has impacted housing demand."

So while this is undeniably good news, the question becomes is it sustainable and how long before this trend hits Maui? Economists estimate the lag is usually six months.

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