The government says new home sales fell more steeply than expected last month. The decline of more than eight percent took home sales down to the lowest level in seven years. As builders worked more aggressively to trim bloated supplies of unsold homes, prices were coming down. The Commerce Department says the median price in August dropped 7.5 percent from a year earlier to more than $225,000. That was the biggest percentage drop in nearly 37 years. Regionally, the sales picture was mixed. Sales fell in the south and west last month, but rose in the northeast and midwest. To help protect the economy from the ill effects of the housing slump and credit crunch, the Federal Reserve last week slashed a key interest rate.
Homebuilder KB Home reports swinging to a loss in the third quarter. It is warning that the housing market will likely remain weak next year. The Los Angeles-based company, one of the nation's biggest home sellers, had a loss of nearly $36 million. KB took pretax charges of hundreds of millions of dollars to write down the value of unsold inventory and joint-venture holdings. The third-quarter cancellation rate of 50 percent was lower than the 60 percent rate in the prior year third quarter, but worsen than the rate in the second quarter of this year. KB Home says it expects the market to worsen through 2008 as rising foreclosure rates increase the supply of homes on the market, leading to lower prices.
Rates on 30-year mortgages rose for a second straight week, marking a rebound after hitting a four-month low. Mortgage giant Freddie Mac reports that 30-year, fixed-rate mortgages averaged 6.42 percent this week, up from 6.34 percent last week. Two weeks ago, the nationwide average for 30-year mortgages dipped to 6.31 percent, the lowest level since May. Rates on 15-year fixed-rate mortgages, popular for refinancing, averaged 6.09 percent this week, up from 5.98 percent last week. While rates on 30-year and 15-year mortgages rose this week, rates on five-year adjustable-rate mortgages and one-year arms declined for a fourth straight week.
Freddie Mac has agreed to pay $50 million to settle federal charges that it fraudulently misstated earnings over a four-year period. In a settlement announced by the Securities and Exchange Commission, the federal mortgage finance company doesn't admit or deny wrongdoing. It does agree to refrain from future violations of the securities laws. In addition, three former Freddie Mac executives settled the SEC's negligent conduct charges by agreeing to pay civil fines and to make restitution.
Houston-based KBR plans to put greater emphasis on domestic industrial construction and other parts of its business. The former Halliburton subsidiary's work for the U.S. military in Iraq has prompted Congressional inquiries. KBR Chairman Bill Utt also says the company hasn't ruled out potential acquisitions to expand its base. Utt spoke to reporters after KBR's first shareholder meeting--in League City. Utt acknowledged the military contractor and engineering/construction outfit was likely to continue to do less work in Iraq as troop levels decrease. KBR provides food, laundry and other support services for U.S. personnel. He says KBR will focus on getting back to its roots, looking to land more industrial construction and other projects that contributed to its bottom line 20 years ago.
Airline executives told lawmakers that forcing airlines to pay more to fly during peak travel periods wouldn't mitigate record delays. Executives for Houston-based Continental Airlines and Atlanta-based Delta Air Lines spoke to the Senate Aviation Operations Subcommittee. That's as lawmakers and the Bush administration consider ways to address the problem of record flight delays. Zane Rowe, Continental's Senior Vice President of Network Strategy, says that forcing airlines to pay more to fly during peak travel periods would "do nothing more than reduce service to small communities, reduce job growth and raise fares for commercial passengers.'' But the Federal Aviation Administration says congestion pricing worked well at New York's LaGuardia International Airport in the 1960s. Transportation Secretary Mary Peters and acting Federal Aviation Administrator Bobby Sturgell met with President Bush to discuss options for mitigating flight delays. Sturgell told House lawmakers this week that the FAA is considering several strategies for reducing delays, including introducing so-called congestion pricing at busy airports.
Goliad County officials are joining with ranchers, environmentalists and economic development groups to fight a proposed uranium mine. Uranium Energy is seeking a permit from the Texas Commission on Environmental Quality for a full-scale mining operation. The company has been exploring for uranium in the area for the past year. The Goliad County Groundwater Conservation District says it measured an increase in minerals and iron in wells during that time. Goliad County has already set aside $200,000 to fight the mine. Uranium Energy officials have said their exploration for uranium has nothing to do with the well contamination. Local officials say engineering studies show their concerns about contaminating the Evangeline Aquifer are valid.