New home sales up

The Commerce Dept. reported new home sales rose 2.4% in July, but sales in June fell to the lowest point since Sept. 1991. Tighter lending could stall any housing recovery. The sub-prime mortgage fiasco continues to affect lenders and mortgage holders, as the huge losses by the lenders are yet to play out. They simply can not and will not approve high risk loans anymore. That disqualifies many potential home buyers. Most experts agree the credit crunch will not ease, and with it the upswing in new home building, until 2010. Defaults on mortgages continue at a high rate, and foreclosures increase. Many of the new home sales in July were homes deeply discounted by builders simply to get warm paying bodies in many units that have sat completed and unsold.

New Homes Still Weak

New home construction continues to be at lowest level since early 80s.Existing home renovations are at low levels,as the recession causes middle class homeowners into a wait and see attitude.Contractors are undercutting each other to get work.Price sells the job,so the average customer is presently in the drivers seat as many,if not most,contractors are in the squeeze of trying to retain skilled workers in the face of slow times.There is such a slowdown in construction that highly experienced tradesmen are leaving the industry in large numbers.There is a downward pressure on wages as there are more tradesmen than work.Management will seek any and all avenues to cut costs,including materials,benefits,and especially labor costs.As always,ready to leap into the labor vacuum are the low and medium skilled workers who always run after the dangled plum.