Existing-home sales drop again
By Martin Crutsinger
AP Economics Writer
WASHINGTON — Sales of existing homes fell for the sixth straight month in January, dropping to the slowest sales pace on record. Median home prices also were down and many analysts predicted further price declines in the months ahead given high levels of unsold homes.
The National Association of Realtors said yesterday that sales of single-family homes and condominiums dropped by 0.4 percent last month to a seasonally adjusted annual rate of 4.89 million units. That was the slowest sales pace, going back to 1999, and was seen as evidence that the steepest slump in housing in 25 years has yet to hit bottom.
The median price of a home sold in January slid to $201,100, a drop of 4.6 percent from a year ago. Particularly alarming, analysts said, was that the inventory of unsold homes jumped to a 10.3 months' supply, meaning it would take that long to sell the 4.19 million homes on the market at the January sales pace.
That was up from 9.7 months in December and just below a 20-year high of 10.5 months hit in October. During the peak of the housing boom in 2005, the supply of homes relative to sales stood at 4.5 months.
"With sales weak and inventories at extraordinarily high levels, prices are likely to fall a lot more," said Joel Naroff, chief economist at Naroff Economic Advisors. "Eventually, sellers will end their denial and realize that if they want to unload their homes, they will have to cut prices even more."
Analysts said one of the problems was a rising tide of mortgage foreclosures, which is pushing even more unsold homes back on a glutted market.
Wall Street put aside worries about the weak housing market to stage a strong rally yesterday based on signs that troubled bond insurers will successfully emerge from the credit market crisis. The Dow Jones industrial average surged by 189.20 points to close at 12,570.22.
Sales of existing homes fell by 12.7 percent in 2007, the biggest decline in 25 years, and are down 20 percent from their all-time high set in 2005, the final year of a five-year housing boom that saw sales and prices soar to record levels. Over the past two years, housing has been in a steep downturn made worse by a severe credit crunch as financial institutions tightened their lending standards in reaction to their multibillion-dollar losses on mortgages that have gone into default.
"With prices expected to continue dropping and banks leery to make loans, few prospective homeowners feel now is the time to buy," said Michael Gregory, an economist at BMO Capital Markets.
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Hawai'i better
Hawai'i's real estate market isn't nearly as bad as the numbers reported yesterday by the National Association of Realtors.
As reported earlier this month, the median price for existing single family homes in Honolulu was unchanged in January at $600,000 compared with a year earlier. The number of sales fell by 13.3 percent.
The median price for condominiums on O'ahu rose by 1.3 percent to $324,000, according to Honolulu Board of Realtors data.
Those numbers compared to the national median price for all housing types that was off 4.6 percent from January a year earlier.
The number of sales nationally slid by 23.4 percent.. |