Sales of existing homes dropped again in December, a new report shows. Marketplace's John Dimsdale addresses how the declining housing market is affecting Wall Street.
MADELEINE BRAND, Host: John Dimsdale is here now from MARKETPLACE. And John, how bad are those numbers?</s>JOHN DIMSDALE: This inventory is finally beginning to come down slowly. The experts have been saying that before the housing industry can recover, it has to work down that inventory to around a five or six month supply. At this rate, it's going to be the end of the year before we get down to those numbers.</s>MADELEINE BRAND, Host: Okay. So this is obviously bad news for anyone who wants to sell their home, but what about for people who want to go out and buy one?</s>JOHN DIMSDALE: Lenders are beginning to get in touch with their customers to see if they want to refinance an existing mortgage that might be, you know, running 6 percent or more. Now, refinancings, you know, don't necessarily stimulate sales of existing new homes, but over the long term cheaper mortgages should help generate some buying and selling of homes.</s>MADELEINE BRAND, Host: So you just mentioned Freddie Mac. There is some news about Freddie Mac in this new economic stimulus package out of Washington. Tells us more.</s>JOHN DIMSDALE: That's right. There's serious talk of raising the loan limits of government-backed mortgages. Currently, the cap is just over $400,000. Now, that's not even a median-priced home in many markets these days. So Congress is considering a rescue package that would allow these government-sponsored mortgage underwriters, like Fanny and Freddie and FHA, to beef up their offerings.</s>MADELEINE BRAND, Host: Thank you, John. That's John Dimsdale of public radio's daily business show MARKETPLACE.