New home sales tumbled in August to the slowest pace in 17 years, while mortgage rates spiked this week, increasing pressure on the new chief executives of Fannie Mae and Freddie Mac to help stabilize the housing market.
Sales of new homes fell by 11.5 percent from July to August, to an annual sales rate of 460,000 units, the slowest sales pace since January 1991, the Commerce Department said Thursday. Compared with August of last year, the number of new houses sold fell 35 percent.
The median price slid 5.5 percent to $221,900.
The report came a day after the National Association of Realtors said existing home sales fell 15 percent in August, compared with a year ago, while the median sales price fell a record 9.5 percent to $203,100.
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Many experts say the housing market's decline isn't over yet, as foreclosures and defaults continue to soar. Moody's Economy.com forecasts that U.S. home prices won't hit bottom for another year.
Also keeping buyers on the sidelines: tight lending standards and rising mortgage rates. The average interest rate for a 30-year, fixed-rate loan this week is 6.09 percent, up from 5.78 percent last week, Freddie Mac said Thursday. That increase boosts the payment on a $200,000 loan by about $40 a month.
Freddie Mac and its sibling company, Fannie Mae, were seized by government regulators nearly three weeks ago as their losses mounted from the housing market's decline. An alarming number of homeowners were falling behind on their payments and going into foreclosure.
Many in the mortgage industry have been anxiously waiting for the companies to scale back higher fees and tighter lending standards that the company put in place over the past year.
Fannie Mae and Freddie Mac are the dominant players in the U.S. mortgage market. While they don't make loans directly to consumers, they own or guarantee more than $5 trillion in loans, about half of the nation's total.