Sales of existing homes fell in March while the median home price declined, as a severe slump in housing showed no signs of abating. The National Association of Realtors says sales of existing single-family homes and condominiums dropped by two percent in March to a seasonally adjusted annual rate of 4.93 million units. The median price of a home sold last month dropped to $200,700, a decline of 7.7 percent from the median price a year ago. That was the second-biggest year-over-year price decline on records dating back to 1999. For March, sales were down 6.5 percent in the midwest and 3.5 percent in the south but increased by 2.2 percent in the northeast and 2.2 percent in the west. The northeast was the country's only region to experience a rise in median prices.
An influential economist says the slump in the housing market could cause prices to fall more than they did during the Great Depression. Yale University economist Robert Shiller says there's a good chance that housing prices will exceed the 30 percent drop during the depression of the 1930s. He says home prices nationwide have already dropped 15 percent from their peak in 2006. His closely-watched Standard & Poor's/Case-Shiller Home Price Index examines price changes of the same property over time, instead of calculating a median price of homes sold during the month. Shiller says real estate cycles typically take years to correct. Shiller endorsed legislation proposed by Senator Chris Dodd and Congressman Barney Frank that would allow the Federal Housing Administration to back as much as $300 billion in mortgages for struggling homeowners.
The Euro has roared to another record high. It crossed $1.60 in trading in Europe after a pair of European central bank governors said high inflation may cause the bank to raise interest rates. The Euro has risen 20 cents against the dollar in just five months--ten cents in just two months. The 15-nation currency hit its last record of $1.5982 last Thursday. It dropped back on Friday after a Wall Street rally generated optimism that the worst of the U.S. credit crunch may be over, but rose again on Monday when Bank of America's first-quarter earnings fell short of expectations. The dollar's slump is a boon for U.S. companies that rely heavily on exports, but it's the bane of travelers as worldwide inflation rises, air fares climb and prices rise in dollar terms for everything from beer in Munich to fine wine in Paris to gondola rides in Venice.
An Earth Day announcement by Transportation Department Secretary Mary Peters—new fuel efficiency standards will be increased by more than four percent each year from 2011 through 2015. Peters says by 2015 the nation's fleet of new cars and trucks will have to average 31.6 miles per gallon. She says the proposal is "an aggressive but achievable standard.'' An automobile manufacturers spokesman says the numbers are "very challenging'' but they also put the industry on a course to "significantly reduce greenhouse gas emissions.'' The government estimates that the additional fuel mileage will add about $650 to the price of a car and more than $900 to the price of a truck by 2015. Estimates are that more than 54 billion gallons of oil will be saved and emissions will be reduced by 521 million metric tons over the lifetime of cars and trucks built during the four year span.
Gas and oil prices have edged up further into record territory. Crude has neared $120 a barrel as the dollar fell to a new low against the Euro. Retail gas prices have reached a national average of $3.51 for the first time. AAA and the Oil Price Information Service say the national average price of a gallon of regular gas rose just shy of a cent overnight. Gas prices are nearly 66 cents higher than last year, when prices peaked at a then-record of $3.23 in late May. Light, sweet crude for May delivery rose to a new trading record of $119.74 before retreating slightly on the New York Mercantile Exchange. Supply has been hurt by the militancy and lawlessness in southern Nigeria. Attacks on oil infrastructure have become common there, chopping crude oil deliveries some 169,000 barrels a day in April and May. Nigeria produces light, sweet crude, which is especially desirable in the U.S. market during the summer gasoline season. Oil production troubles are also reported in Mexico and potentially Scotland. OPEC is planning to boost production by 2012, but experts say that will do nothing for oil prices now.
One New York cab driver says the price of gas is killing him. In his words, "every day you see the price go up five, six, ten cents more.'' Truckers are also reeling as diesel prices hit a record high of $4.20 a gallon. Drivers are cutting back. In New York, some say they're taking the subway more often. One woman in Chicago, who paid $52 dollars to fill just three-quarters of her tank on her SUV, says she's buying a bike to commute to work this summer. The Energy Department says gasoline consumption recently fell more than one percent. A University of Texas energy expert says such consumption drops should continue in the summer if gas prices rise or even remain at the current levels. Industry watchers say fuel costs are expected to continue to climb, with crude oil nearing $120 a barrel.
Houston-based Gulf Ethanol says it will no longer use food-based crops to produce biofuels. The company will instead use feedstock such as sorghum, switchgrass and other non-food biomass. Critics claim ethanol is contributing to a rise in the price of certain foods.
Texas is number one for corporate headquarters. The Lone Star State has surpassed New York as home to the most big companies in the latest list compiled by Fortune magazine. Texas now boasts 58 headquarters. That's three more than the old number one New York, and California, with 52. Business experts say it's a matter of simple economics—Texas attracts companies with its low taxes, affordable land and large labor force. Irving-based ExxonMobil remained the biggest Texas-headquartered company by 2007 revenue, and number two nationally, behind Wal-Mart stores. ExxonMobil, however, was more profitable, earning $40.6 billion. According to the magazine, high oil prices helped land another Texas oil company, Houston-based ConocoPhillips, at number five in the national rankings. San Antonio-based AT&T jumped from number 27 to tenth place. Four of the largest six corporations in Texas last year were oil companies, but the state's economy is more diverse than it was a generation ago. Other Texas companies on the magazine's list include technology, such as Dell, three of the nation's biggest airlines, two of the biggest homebuilders, an insurer, a hospital company and the largest garbage hauler around. Houston has the most Fortune 500 companies in the state with 25, plus one in The Woodlands. Dallas boasts 12--its suburbs are home to seven more--and San Antonio has four.