Posted on 01/24/2008 8:24:01 AM PST by central_va
WASHINGTON (AP) -- Sales of existing homes fell in December, closing out a horrible year for housing in which sales of single-family homes plunged by the largest amount in 25 years. The median home price dropped for the entire year, the first time that has occurred in four decades.
The National Association of Realtors reported that sales of single-family homes and condominiums dropped by 2.2 percent in December to a seasonally adjusted annual rate of 4.89 million units.
For the year, sales of single-family homes were down by 13 percent, the biggest drop since a 17.7 percent plunge in 1982. The median price for a single-family home dropped 1.8 percent to $217,000.
That was the first annual price decline on records going back to 1968. Lawrence Yun, the Realtors' chief economist, said it was likely that the country has not experienced a decline in housing prices for an entire year since the Great Depression of the 1930s.
The new figures underscored the severity of the slump in housing, which has been battered for the past two years after enjoying a boom in which sales set records for five consecutive years.
The housing bust has sent shock waves through the entire economy as defaults have risen, resulting in multibillion-dollar loses for big financial firms whose investments in subprime mortgages have gone sour.
There is a concern that the housing and credit troubles could be enough to push the country into a full-blown recession. After global stock markets experienced a sharp sell-off earlier this week, the Federal Reserve announced a bold three-quarter point cut in a key interest rate and held out the promise of more rate cuts to follow.
The Bush administration and congressional leaders are trying to quickly wrap up negotiations on a stimulus package in an effort to boost consumer and business confidence.
For December, sales were down in all regions of the country. Sales fell by 4.6 percent in the Northeast, 1.7 percent in the Midwest, 1 percent in the South and 2.1 percent in the West.
The inventory of unsold homes dropped by 7.4 percent, raising hopes that backlogs that had hit record levels were starting to be reduced, a key factor necessary to prompt a rebound in the market.
While Yun said he expected sales to start to rebound this spring, other analysts said housing is likely to remain in the doldrums throughout most of 2008, reflecting in part the credit crunch, which has caused lenders to tighten their standards, making it harder for prospective buyers to qualify for loans.
In other economic news, the Labor Department said Thursday that the number of laid off workers filing claims for unemployment benefits fell for a fourth straight week, dropping by 1,000 to 301,000.
Many economists cautioned that they still expected layoffs to start rising in coming weeks, reflecting the sharp economic slowdown that has taken place.
The economy, after racing ahead at an annual rate of 4.9 percent in the July-September quarter, probably slowed to a weak 1 percent rate in the final three months of 2007 and may even fall into negative territory in the current January-March quarter.
A recession is often defined as two consecutive quarters of falling economic output. Many economists believe the risks of a full-blown downturn are roughly 50-50.
The growing worries about the economy in an election year have captured the attention of President Bush and congressional leaders who are working to put together a $150 billion economic stimulus package that will include tax relief for households and businesses in an effort to bolster economic activity.
The drop in unemployment applications to 301,000 for the week ending Jan. 19 left total claims at the lowest level since 300,000 were recorded during the week of Sept. 22.
For the week of Jan. 19, 36 states and territories had increases in claims while 17 had declines.
The biggest increase occurred in California, up 27,194, an upsurge blamed on higher layoffs in construction and service industries, and Florida, with an increase in layoffs of 8,496, which was attributed in part to higher layoffs in construction. California and Florida have been particularly hard hit by the housing slump.
Everyone, please form a single file to the window ledge. No shoving.... No sense in seeing how it all plays out. You’re doomed. Just join the line folks....
“The median home price dropped for the entire year, the first time that has occurred in four decades.”
After 8 years of exponential growth...duh.
Not much of a bubble in the South, with only a 1% decline in home sales. The West was worst, but did they really think that home prices would just keep going up by double digits every year? Now that is the real “fairy tale” that the Clintons should be talking about as she lies for votes in CA.
"More homes not built this year than were built 25 years ago..."
Oh.. wait...
Put them at a sane price that somebody with a good job can afford with a fixed rate 30 year mortgage and they will sell like hotcakes.
Keep them at a price that somebody with a good job can only afford with a gimmick loan that will drive them into foreclosure in 5 years when the grace period has expired and they will rot unsold.
The supply of Greater Fools has run out in America.
If more “new” homes are sold and people are deciding to stay in their “existing” home and not selling it or decide to make it “rental property” then This headline doesn’t mean much......
Exactly! My home, bought in 2002 for $69K and taxed at that level is now taxed at a value of $135K! I’ll be glad when home prices get back to a sane value once again! Our county commissars are already griping about how much TAX MONEY they’ll be LOSING because of the FALLING HOME PRICES!.................
Exactly.
Where else could it go but down?
Prices are down in NYC. You can get a closet in Manhattan for only $1.2 mill. A bargain, a steal, I tell you!
...don’t forget about the blue light specials on parking spaces...$250K, for the next two hours only...
Actually, they underscore the absurdity of the rise in housing the previous 5 years.
They don't tell us how MANY homes there were sold in 2004. I think it was LESS than the number sold this year. It's just that for a few years, sales shot through the roof.
My house is still worth twice what it was worth 5 years ago, even though it's dropped 20%. That's just absurd.
Fortunately, I knew better than to take a new loan out for all the value and spend it on extravagant living.
Potential buyers and potential sellers can’t agree on a price. You’re right, there IS nothing to see here!
People who purchased their homes 10 years or so ago in the overpriced market would not be able to afford the same house today, let alone move up to a bigger, more expensive house. If you bought a house in an overpriced market, you're screwed now. You can't move on, you just have to stay put. Those are the breaks, unfortunately.
We've been in the same house for almost 30 years, so aren't hurt by this housing market correction except to the extent that we would like to retire and move in a few years in what might be a buyer's market.
Our small local market has remained steady with appreciation seen the last two years. Our medium priced home is about $76,000 now. Real estate values are all about the local market.
Funny thing about housing and equities. When they are on sale, nobody wants them.
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