Posted on 05/25/2007 1:01:40 PM PDT by GodGunsGuts
Existing Home Sales Drop to 4-Year Low
MoneyNews Friday, May 25, 2007
WASHINGTON -- Sales of existing homes fell by a larger-than-expected amount in April while the median price of a home sold during the month fell for a ninth straight month as the troubles in the subprime mortgage market acted as a further drag on housing.
The National Association of Realtors reported Friday that sales of existing homes fell by 2.6 percent last month to a seasonally adjusted annual rate of 5.99 million units. That was the slowest sales pace since June 2003.
The median price of a home fell to $220,900, an 0.8 percent fall from the midpoint selling price a year ago. It marked the ninth straight decline in the median price.
Sales were weak in all parts of the country. The Northeast experienced the biggest decline, a fall of 8.8 percent in April from the March sales pace. Sales were down 1.7 percent in the West, 1.2 percent in the Midwest and 0.7 percent in the South.
The drop in sales was accompanied by a big jump in the number of unsold homes left on the market. They climbed to a record total of 4.2 million. It would take 8.4 months to exhaust that supply of homes at the April sales pace.
Analysts are concerned that the glut of unsold homes will further depress prices in coming months.
But Lawrence Yun, senior economist for the Realtors, said that the small year-over-year price decline of less than 1 percent was still modest compared to the 50 percent rise in home prices that occurred during the five boom years that ended last year.
Yun said some of the weakness in April reflected a weather payback after sales had shown gains at the beginning of the year, reflecting warmer-than-normal winter weather.
He also blamed the rising troubles in the subprime mortgage market, the area of the market designed for borrowers with weaker credit histories. Rising mortgage foreclosures are causing banks and other lenders to tighten up on their lending standards while curtailing their more risky loan business.
"We've been anticipating slower home sales because many subprime loan products are no longer available," he said. "Fortunately, a wide availability of conventional mortgage products and the 4.5 million jobs created over the past 24 months will help stabilize the market going forward."
He said the big rise in unsold homes on the market could be an indication that sellers are testing the market in hopes of selling their homes and moving up to larger units, which he said would be a positive early sign of a rebound in housing.
But other analysts are not as optimistic, expressing concerns that housing could remain under downward pressure for the rest of this year and stage only a modest recovery in 2008.
The troubles in housing have acted to depress overall economic activity which slowed to a growth rate of just 1.3 percent in the first three months of this year, the slowest economic growth rate in four years.
© 2007 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.
I love the "Home sales up 16%" headlines, as if that is great news when prices dropped 11%, which is only mentioned in small print in the body. I expect existing home prices to follow new home prices down. I'm also sure that someone will write a "well not in my neighborhood" response to this article. Anecdotes are meaningless when discussing nationwide prices.
bttt
You're funny. Buy any foreclosures yet? LOL!
I have traveled the entire west coast in the past two months, interviewing people who sold their homes.
How many people?
In my personal opinion, the feds ought to be prosecuting them under RICO for ponzi scheme games.
You don't know what a Ponzi scheme is, do you?
Secluded = five miles from nearest paved road
Natural setting = Hope your DR trimmer has plenty of gasoline
Of course, there are those of us who like ‘seculded’ and do own things like chainsaws, dr trimmers, etc.
Excerpt:
Housing prices will suffer from a "significant increase in defaults and foreclosures," he said, with affordability still a major issue. Wyss worried how hard the slump will hit already highly inflated housing markets. * * *
"The run up," Yun said, "was an investor-demand driven boom, and it was followed by an investor-driven collapse." * * *
New Home Price Crashed at Least 11% Already . . . plus another 8% says CNN quoting the NAR. The true figure is out there, somewhere (18% - 35%).
There are 3 houses on my block. My house is paid for and not for sale. The house next door is on the market and has been for 3 months. I believe one person looked at it. The other has been repossessed by the bank and will be auctioned off on June 20. $37000 is owed on the house and the people couldn’t make the payments. I’m thinking of making a bid (starting bid $10,000!) and renting it out. Of course this is Montana..........
Importantly, “a ‘Ponzi’ finance unit must increase its outstanding debt in order to meet its financial obligations.” Such a structure is patently unsustainable. And with the U.S. now running a current account deficit of more than $1 billion daily, there is “no room for error.
How many times have you heard local radio commercials advise home buyers to refinance ? These stupid ads are running nonstop 24/7 out here. They constantly tell people to go further into debt.
'Consolidate all your credit cards payments' and 'buy a new house and get an SUV' are classic examples of Ponzi finance principles.
Just like saying: "Dig and little deeper. You almost have a grave" . . .
Excellent graph.
Your prediction in 2003 was that housing was "at it's tip-top peak". Have prices dropped to the 2003 level anywhere in the country?
Now thats funny. It takes gonads to be wrong for four years then claim you ‘nailed it’ five months ago. But what would I know, I’m just some young geezer who is way ahead of some loser who cashed out in 2003.
Sales of imaginary homes fell by 8% during the same period.
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