Kathleen M. Howley
Wednesday, Sept 24, 2008
U.S. home prices tumbled in July as the credit crisis that led to this month’s toppling of Lehman Brothers Holdings Inc. tightened mortgage standards and slashed real estate lending.
Home purchase prices dropped 5.3 percent, seasonally adjusted, from a year earlier, the Office of Federal Housing Enterprise Oversight said today in a report. The one-month decline from June was 0.6 percent, said Washington-based Ofheo.
Eight out of nine U.S. regions showed declines for the year as lenders tightened requirements after banks posted $523 billion in mortgage-related losses and writedowns worldwide. U.S. Treasury Secretary Henry Paulson this week asked Congress to approve $700 billion to buy the type of investments that forced Lehman Brothers to file for bankruptcy and American International Group Inc. to accept a federal takeover.
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“You’re still looking at the residual effects of a marketplace that is starved for mortgage money,” Michael Aronstein, president of New York-based Marketfield Asset Management, said in an interview.
The decline in July from June was greater than the 0.2 percent average estimate of 15 economists surveyed by Bloomberg News. Ofheo now is part of the Federal Housing Finance Agency created by Congress in July to oversee Fannie Mae and Freddie Mac, which own or guarantee $5.4 trillion of mortgage debt. The mortgage buyers were seized by the government two weeks ago to prevent their collapse.