Nationally, new home sales fell 6.6 percent in June to a total of 22 percent below a year ago. Builders are cutting prices, and the median price of a new home is down more than two percent from a year ago. Sales of existing homes fell nearly four percent to a five-year-low. Times are hard all over, and University of Houston economist Barton Smith says even Houston's healthy housing market is feeling the pinch.
"Even though housing is very affordable in Houston, we can still feel the aftermath, or aftershocks, of the credit crunch in the housing market. We're seeing home starts in Houston fall fairly substantially. We're down about 25 percent off our highs in Houston. So we're not immune."
Smith says upscale homes are shoring up Houston's housing market right now. Low end starter homes aren't doing well.
"The starter market, that even in Houston was highly dependent on subprime mortgage lending, that's being hurt almost as bad as it is throughout the nation."
On top of the national sales slump, mortgage interest rates are trending down. Smith says it's a good time to be a buyer.
"It's obviously creating a buyer's market for buyers that have got excellent credit and a sizable amount of cash to put down on a home."
Houston Association of Realtors Board Chairman Rob Cook says he agrees with Barton Smith's prediction that with tighter standards on mortgage lending, and less subprime lending, things will settle down in six months to a year.
"People like Countrywide stepped up and said 'we're not doing this anymore', and I think they're still the biggest lender out there. They'e changing how they do business, everybody else is kind of following, and says 'yeah we need to tighten up also', and so I think the market will correct itself."
Cook says sales of Houston area starter homes in the $80,000 to $130,000 range are down, as they are nationally, but upscale home sales are as strong as ever because the economy is so strong. Jim Bell, Houston Public Radio News.