S&P: Subprime prolongs housing slump |
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Thu, 31 May 2007 21:04
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NEW YORK (AP) - The troubles in the mortgage industry are prolonging the housing slump, according to a Standard & Poor's report issued Thursday.U.S. homebuilders, many of which had hoped the housing market would begin rebounding this year, have reported a disappointing spring selling season so far. This month, the National Association of Realtors reported sales of existing homes fell 10.7 percent in April to the slowest pace in nearly four years. The Commerce Department reported April sales of new homes fell 10.6 percent year-over-year.The housing market has been hobbled by a combination of factors, including higher interest rates, an inventory glut and an end to speculative buying. The Realtors association said an eight-and-a-half month supply of homes currently sits on the market unsold.S&P said in a report more stringent lending standards and 'persistent consumer skepticism' could keep the market saddled with unsold homes.Earlier this year many 'subprime' lenders reported borrowers were missing payments on their loans more frequently. More than 30 lenders have gone bankrupt this year, as bad credit devalued loan portfolios and banks cut off financing for home lenders.Concerned about credit quality, lenders catering to borrowers at the bottom of the credit ladder have become more selective about the risks they are willing to assume. This means some prospective borrowers can no longer find loans to buy homes.With the mortgage industry hesitant to extend loans to riskier borrowers, many potential home buyers are being kept out of the market.'Heightened uncertainty regarding the ultimate timing of a recovery has turned our rating bias on homebuilders decidedly negative,' said S&P credit analyst James Fielding.Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Foreclosures spike in March 