By Kathleen M. Howley
June 24 (Bloomberg) -- U.S. home prices fell 4.6 percent in April from a year earlier, led by a 15 percent drop in states on the West Coast, the Office of Federal Housing Enterprise said.
The monthly house price index is down 4.6 percent from its peak in April 2007, Washington-base
The worst U.S. housing slump in more than a quarter of a century is deepening as falling values discourage potential buyers. The median U.S. home sale price may drop 8 percent this year, the biggest retreat on record, followed by another 5.1 percent decline in 2009, according to a forecast last week from Fannie Mae, the world's largest mortgage buyer.
``House prices on a nationwide basis have retreated to their December 2005 levels,'' James Lockhart, director of Ofheo, the federal agency that oversees Fannie Mae and its smaller rival Freddie Mac, said in the report.
The 15 percent drop occurred in the so-called Pacific Census Division, which includes Washington, Oregon and California. The eight states along the Rocky Mountain range, including Colorado and Wyoming, fell 4.9 percent, the report said.
Regional Declines
The South Atlantic region, along the U.S. southeastern coast, had the third-biggest decline, of 4.8 percent. New England, which includes Massachusetts and Connecticut, was fourth with a drop of 4.6 percent.
The number of Americans in danger of losing their homes to foreclosure rose to the highest in at least three decades during the first quarter as borrowers who fell behind on payments were unable to sell their homes.
New foreclosures rose to a seasonally adjusted 0.99 percent of all U.S. home loans, up from 0.83 percent in the fourth quarter, the Mortgage Bankers Association said in a June 5 report. The delinquency rate, loans with one or more payments overdue, grew to 6.35 percent. Both were the highest in a series that goes back to 1979, the Washington-base
Six out of every 10 banks raised standards for home loans to their most creditworthy borrowers in the first quarter, according to a Federal Reserve survey of senior loan officers. About 8 out of every 10 banks had stricter qualifications for so-called non- traditional loans such as interest-only mortgages, the report showed. END
Heating, Electricity Rates Rising As Prices For Natural Gas Surge
INVESTOR'S BUSINESS DAILY
Posted 6/23/2008
Consumers struggling with $4 gasoline face ballooning costs for another energy source: natural gas.
Natural gas futures have vaulted 154% since its Aug. 27 low to $13.203 per million British thermal units on Monday.
The run-up has outpaced the rise in crude oil, which has doubled.
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"The consumer really hasn't seen the impact of higher prices," said Chris Jarvis, president of Caprock Risk Management. "There aren't that many people griping about it yet."
High heating and electricity costs, along with record gasoline and food prices, could chill already lukewarm consumer spending.
Experts point to low supplies, strong demand and record crude costs for natural gas' run-up.
"The increase in prices has been pretty dramatic," said Patrick Armstrong, assistant economist with Moody's Economy.com. "You don't hear about it quite as much as you do with gas prices because people don't see the prices like they do when they go to a gas station."
Utilities have begun to pass on some of those costs to customers. But rate increases vary widely, depending on location and other factors, says Jim Owen, spokesman for the Edison Electric Institute, a trade group for investor-owned utilities.
As a heavily regulated industry, utilities don't pass on higher energy costs as quickly as oil companies do at the pump. They also have long-term contracts, insulating them somewhat from soaring market natural gas prices.
Xcel-erating Energy Rates
Xcel Energy, (XEL) which serves residents of Colorado and seven other states, has raised the price of electricity for customers by 15% in the first half of 2008 in Colorado, spokesman Tom Henley says. Xcel is proposing an additional 10% hike for the third quarter. Henley says natural gas prices are a key reason.
Nearly half of Xcel's power capacity comes from natural gas. The other big power source is coal, which also is soaring in price.
As for the natural gas that customers buy directly to heat their homes or water, Xcel wants rates in July that will be 38% above the year-ago period.
Pacific Gas & Electric Co., (PCG) which serves Northern California, said it needs to raise electricity rates later this year and again in January for a total rise of more than 6%, says company spokesman David Eisenhauer. He cited rising natural gas prices, along with less hydroelectric power.
Eisenhauer notes 44% of the utility's electricity comes from natural gas-fired power plants.
Utilities rely on long-term contracts and other instruments, says Owen, shielding themselves from volatile spot and futures prices.
That helps explain why electric utility stocks have done reasonably well in recent months.
Also, utilities tend to use gas-fired plants for "peak" demand — when there's more strain on the utility for power. Utilities often tap coal or other lower-cost energy sources first when there's less demand.
Natural gas provides about 20% of the nation's power, analysts say.
About half the country has used natural gas to heat homes since 2005, the latest year for which data are available, according to Kobi Platt, an economist with the Energy Information Association.
Nevertheless, Owen points out that as prices stay high, utilities will find it harder to avoid pricier natural gas — and that will push more of them to raise prices.
Natural gas also is becoming a much larger part of U.S. electricity generation, rising 34% from 2002 and 2007, according to Platt.
When a region needs more power, the local utility often opts for gas-fired plants, which many see as cleaner than coal.
"Most of the incremental generation that has been built has been natural gas," said James Diemer, executive vice president with utility-consult
Gas-fired plants are quick to set up, so capital costs can be recovered quickly. Until recently, natural gas was relatively cheap.
But natural gas' futures are near their highest levels since the records after Hurricanes Katrina and Rita in 2005, when they topped $15 per million Btu.
A key reason: Supplies are tight. Natural gas in storage is 1% below its five-year average, the EIA reported last week. That might not sound like much, but this is the time of year when supplies should be ballooning, not scraping by. Natural gas is in high demand during the winter when furnaces are turned on.
"We are short," said Robert Ineson, senior director with Cambridge Energy Research Associates. "We are significantly short."
Supplies were in great shape in December. But a chilly winter — and several other factors — drained supplies as customers turned up their thermostats.
Also, the rising use of natural gas to power electricity softened supplies. As part of that trend, many industrial companies — which have their own generators — turned to natural gas from oil for their electricity needs as oil prices soared, Jarvis says.
Global demand also crimped supplies and pushed up prices.
The U.S. produces most of its own natural gas, but still buys 3% to 4% outside of North America in liquid form. Prices for liquid natural gas have been higher in other parts of the world, including Japan and Spain, so shipments to U.S. ports have softened.
Oil prices — though a much more globally traded commodity — tends to push up natural gas prices as an energy cousin to oil, analysts say. Crude is up about 40% this year.
"When crude oil goes (higher) . . . everything just gets lifted," Jarvis said.
Experts caution prices from here could remain volatile. Consumers should hope for no big hurricanes or a sweltering summer that requires more natural-gas fired electricity, they say.
Ineson expects natural gas to cool, given the slowing U.S. economy and other factors.
"We see the market tightness gradually easing," he said.
