U.S. Dollar and Housing Prices Plunge

The dollar tumbled to a near a 15-year low against the British Pound yesterday with fresh signs of an economic downturn in the United States. The dollar approached an unprecedented $2.00 against the British Pound and continued its slide against the Euro, dropping to $1.3194.
Upon news that US industrial orders fell sharply by 8.3% and with the admission by Federal Reserve Chairman Ben Bernanke that Washington is blind to how bad housing really is, currency markets began fluctuating wildly. Bernanke predicted that the housing slump would dampen economic growth into next year. He went on to say that official figures did not pick up the "sharp increase" in cancellations on house deals and might understate the inventory glut. The National Association of Realtors said that the median price of a home sold in October fell for the third consecutive month 3.5% to an average $221,000. The supply of unsold homes rose to 7.4 months, the highest since 1993. The drop in prices represents a stunning change in the housing market. The record high median home price of $230,000 was reached this past summer in July—these massive price increases helped fuel the building spree that flooded the market with new homes. In turn, the excess supply has contributed to the current downturn in sales. This, despite relatively low mortgage rates and low unemployment rates—both conditions that traditionally have contributed to further appreciation in prices. A sharp drop in sales and prices in previously hot markets like Washington D.C. and parts of Florida, coupled with improved sales in some lower-price markets in Texas, have driven median prices down 7 percent in the South.