Market Overview:

Goldman Sachs Global Investment Research recently reported that July housing turnover improvement was likely to be short-lived. In their report they noted that U.S. “existing homes sales declined 9.3% year on year in July, showing improvement from an 11.9% decline in June. With new home sales, reported…, having declined 10.2%, total housing turnover fell 9.4%, better than the 13.4% decline in June and the smallest decline since February.” Goldman Sachs noted that they “still expect housing turnover to deteriorate further despite stable rates on conforming mortgages given a reduction in subprime capacity, and higher rates on non-conforming loans.”

According to Goldman Sachs, “Total inventories grew 12.9% year on year, similar to June and down from 205-plus increases since the end of 2005, although months supply of existing homes increased 5% sequentially to a peak of 9.6.” Goldman indicated that they expect prices to continue to correct, noting that “existing home prices fell 1.0% (in July), the twelfth consecutive month of declines.”

Source: Goldman Sachs Global Investment Research; August 27, 2007, P.M. Headlines, page 2.