New Home SalesCENSUS
776K
U.S. Housing Market · 2007
U.S. Housing Market in 2007
Existing SalesNAR
5.65M
Median PriceNAR
$217,900
30Y MortgagePMMS
6.34%
In 2007, the U.S. housing market recorded existing-home sales averaged 5.65 million, new-construction sales of 776K, and a 30-year fixed mortgage rate of 6.34%.
Existing-home sales fell 12.8% from 2006. the median existing-home price fell 1.8% to $217,900. the 30-year fixed mortgage fell 0.07 percentage points to 6.34%.
By the numbers — 2007: new-home sales 776K, existing-home sales 5.65M, median existing price $217,900, 30-year mortgage rate 6.34%.
Macroeconomic Context
Two thousand seven was the year the subprime crisis became visible to the public, though its full dimensions would not be apparent until 2008. GDP growth slowed to roughly 2.0 percent as housing construction continued its steep decline. Consumer price inflation ran about 2.9 percent, rising sharply toward year-end as oil prices approached $100 per barrel. The Federal Reserve, which had held the funds rate at 5.25 percent since June 2006, began cutting in September — reducing rates three times to end the year at 4.25 percent.
The key events came in rapid succession. In February, HSBC announced unexpectedly large losses on its U.S. subprime portfolio — the first major institution to do so. In April, New Century Financial filed for bankruptcy, the largest subprime originator at the time. In June, two Bear Stearns hedge funds that had heavily invested in subprime mortgage-backed securities collapsed, requiring an emergency rescue. In August, a global liquidity freeze struck money markets as banks refused to lend to each other over uncertainty about which institutions held toxic subprime exposure — a crisis the Fed addressed by cutting the discount rate.
Existing-home sales fell sharply through 2007, and median prices declined in most markets. Foreclosure filings surged. The homeownership rate, which had peaked at 69.2 percent in 2004, was clearly in retreat. Government responses were limited and largely ineffective in 2007: the HOPE NOW Alliance was voluntary, and the legislative responses that would come with TARP and stimulus were a year away. The crisis was deepening, and the worst was still ahead.