Tuesday PM August 24th, 2010

Sales of previously occupied homes has largest monthly drop since 1968…Transocean official testifies that BP’s pressure test problem had been resolved before blowout…Gasoline prices predicted to drop from ten cents to 25 cents in coming weeks…


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Sales of previously occupied homes fell to the lowest level in 15 years last month as the economy weakened. The National Association of Realtors says July’s sales fell by more than 27 percent to a seasonally adjusted annual rate of 3.83 million. It was the largest monthly drop on records dating back to 1968. June’s sales pace was revised downward to 5.26 million. Home sales picked up in the spring when the government was offering tax credits. But the market has struggled since the tax credits expired on April 30th. It would take 12.5 months to sell off the four million unsold homes on the market at the current sales pace. The median sale price was $182,600, up 0.7 percent from a year ago.

Borrowers who had their mortgages modified recently are faring better than those who had them altered earlier in the housing crisis. That’s according to a report by a group of state banking and law enforcement officials. They say the findings suggest that earlier predictions of a coming wave of defaults may not pan out. The state foreclosure prevention working group compared delinquencies in mortgages modified last year with those revised in 2008. Those modified more recently were nearly 50 percent less likely to be seriously delinquent six months after modification than those revised a year earlier. However, the group notes that the number of foreclosures continues to far outpace the number of loan modifications.

An official says a high-ranking employee indicated a pressure test problem had been resolved hours before BP’s Gulf of Mexico well blew out. Daun Winslow works for Transocean, which owns the rig that exploded April 20th, killing 11 workers and setting off the Gulf spill. Winslow tells a government panel that there was confusion among workers in the drill shack, who were talking before the explosion about a negative pressure test, a procedure typically done before a well is plugged. Winslow says he left while the drill team and tool pushers were discussing the pressure test to avoid disturbing them at a time of critical decision making. He says the highest-ranking Transocean person on the rig later gave him a “`thumbs up,” indicating it had been resolved.

Attorneys representing the insurer paying for the legal bills of jailed Texas financier R. Allen Stanford and two of his former company executives are telling a federal judge the three men lied to investors and falsified financial statements. The attorneys say those actions disqualify the three men from having their legal fees being paid for by an insurance policy. But Stanford and ex-executives Gilbert Lopez and Mark Kuhrt–accused of bilking investors out of $7 billion in a massive ponzi scheme–contend they did nothing wrong and say the insurer should honor the policy. U.S. District Judge Nancy Atlas is deciding whether the insurer, Lloyd’s of London, will continue paying their millions in legal fees.

A proposed settlement means Atmos Energy would replace about 100,000 steel lines that provide natural gas to customers in parts of North Texas. Atmos spokesman Ray Granado told the Associated Press that the company is constantly replacing lines and the goal is to “further enhance public safety in the state.” Atmos initially is expected to charge residential customers 15 cents a month to pay for replacing the steel lines, which can corrode and shift. The agreement would lead to installation of plastic natural gas delivery lines. The agreement announced Monday faces approval from affected cities, including Fort Worth, Plano, Richardson and Arlington. Lawyers for the cities helped negotiate the settlement.

With crude prices on the decline, experts say drivers should see more relief at the pump. They predict gasoline prices will drop from a dime to a quarter a gallon in the weeks ahead. Benchmark crude for October delivery fell 72 cents to settle at $73.10 a barrel on the New York Mercantile Exchange. The price neared $75 earlier in the session as Tropical Storm Danielle strengthened in the Atlantic, but forecasters now say it shouldn’t affect Gulf of Mexico oil and gas production. Oil prices have dropped more than $9 since the beginning of August.

President Barack Obama has pledged to bring a million plug-in hybrid electric vehicles to U.S. highways by 2015, and the man tapped to lead the charge has a job ahead of him. David Sandalow is the Energy Department’s Assistant Secretary for Policy and International Affairs. He says the “single quickest thing we could do to get off of our oil dependence is to begin converting our fleet to electric vehicles.” Sandalow has his own hybrid vehicle and says “electric cars are quiet, they’re cheap to drive, they’ve got great pickup and I think they’re patriotic.” And he says he only has to fill up his gasoline tank about once a month. But it may be challenging to turn other people on to the idea. The lithium-ion batteries expected to power electric vehicles are extremely expensive–about $33,000. That can be reduced with tax credits and federal stimulus funds could bring the cost down by the end of 2015. Sandalow says electric cars are the technology of the future.

In a speech on jobs and the economy, House Republican Leader John Boehner is urging President Barack Obama to support an extension of tax cuts and to fire key economic advisers. The text was released in advance before the lawmaker from Southern Ohio spoke to the City Club of Cleveland on Tuesday. In his prepared remarks, Boehner says Obama needs to act immediately on several fronts to break what the Republican describes as “ongoing economic uncertainty.” Boehner says the president should work with the GOP to renew soon-to-expire tax cuts enacted under President George W. Bush. The lawmaker also calls on Obama to propose aggressive spending cuts and seek the resignations of Treasury Secretary Timothy Geithner and other members of his economic team.

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