Record low mortgage rates, but weak economy keeps many buyers on sidelines

Ara K. Hovnanian Hovnanian Enterprises Inc credit KHOVBloomberg reports that U.S. mortgage rates tumbled 4.12 percent, the lowest in at least four decades. “Homebuyers are not responding to these record-low interest rates,” said Patrick Newport, economist at IHS Global Insight in Lexington, Massachusetts. “The reason interest rates are dropping recently is that the outlook for the economy has gotten weaker. A smart person would be very careful about buying a home unless he thinks his job is very secure.”   “The housing market remains challenging primarily due to uncertainty caused by general domestic economic and political concerns, stock market volatility and turbulent international economic conditions,” Ara K. Hovnanian, chairman and chief executive officer of homebuilder Hovnanian Enterprises Inc., said. “We see very few indicators that any recovery in the housing market has begun.”  Fannie Mae polled 1001 Americans Aug 2-25th and found in their survey that 78 percent of Americans said the economy is on the wrong track, up from 70 percent in July. Twenty-seven percent of respondents expect home prices to decline in the next year, the largest share since August 2010. 69 percent said it was a good time to buy a home, but only 9 percent said it was a good time to sell.

(Photo credit: Ara K. Hovnanian credit KHOV)

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