Housing market slumping badly

As prices drop, your equity in your house drops too, and your ability to borrow on that equity through home equity loans or refinancing is reduced. So the latest report on housing prices is not encouragin even if you have no intention of selling your house.

The Commerce Department has reported that the median price of a new home plunged in September by the largest amount in more than 35 years, even as the pace of sales rebounded for a second month.

The median price for a new home sold in September was $217,100, a drop of 9.7 percent from September 2005. It was the lowest median price for a new home since September 2004 and the sharpest year-over-year decline since December 1970. The weakness in new home prices was even sharper than a 2.5 percent fall in the price of existing homes last month, which had been the biggest drop on record.

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