Bad news for the housing market just keeps coming. This morning, the Commerce Department reported that new home sales slipped 0.7 percent in July, a bigger-than-anticipated decline. The seasonally adjusted 298,000-unit annual rate is less than the 310,000 units forecast by economists and a five-month low. The supply of new homes on the market in July would take 6.6 months to deplete. A six-month supply is considered "healthy."
The stock market appears to have factored in the dismal housing outlook and began the day up, despite widespread global distress about the economy and worries about a double-dip recession.
A group of 43 economists polled by the Associated Press say they don't believe there will be a recession in the next 12 months, but recovery will be long and slow. They blame high unemployment and weak consumer spending. The economy improved by just 0.8 percent the first half of 2011.
The economists also say the Federal Reserve's decision to keep rates low will help boost stock prices, but won't improve growth or unemployment.
The silver lining to this dark cloud is that the economists don't think the economy will worsen, but they say the slight uptick over the next year will be nearly invisible. For instance, they expect unemployment to end this year at 9 percent, while the end of 2012 will see a slight improvement to 8.5 percent.
Until the jobs outlook improves, the number of mortgage delinquencies will continue to increase and no matter how low rates and home prices are, the economy has to improve measurably for people to feel confident enough to begin buying.
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