Home Resales & Prices Decline

The backlog of unsold homes continued to pile up in January, a sign that home prices will continue to drop as would-be buyers hold out for better deals.

Sales of previously owned homes fell for the sixth consecutive month, dropping 0.4 percent, to an annual rate of 4.89 million, the National Association of Realtors said on Monday. While the decline was less than forecast, the sales pace is the slowest since the survey began nearly a decade ago. The median home price dipped to $201,100, down 4.6 percent from a year ago.

At the current sales rate, it would take 10.3 months to sell off the current inventory of unsold homes. “That’s enormous,” said Joshua Shapiro, an economist at the research firm MFR. “That’s double the normal amount and well above where we were a year ago.”

In a research note, Mr. Shapiro noted that inventories may actually be higher “if all those wishing to sell their home actually had the house on the market instead of pulling it off in the face of weak demand and eroding prices.”

And economists see little relief in the months ahead, as a combination of tighter lending standards, the softening job market, and elevated inventories keep buyers on the sidelines.

“Home sales have not hit bottom yet,” Mr. Shapiro said. “Prices haven’t declined enough to stimulate enough demand for sales to turn up.”

Weak demand is likely to put more pressure on home owners to lower their asking price, extending one of the worst slumps in the history of the housing industry. The median price of an American single-family home fell in 2007 for the first time in at least four decades, and sales of those homes dipped 13 percent last year, the biggest annual decline in a quarter-century.

Sales of single-family homes actually ticked up in January, but the rise was offset by a plunge in sales of condominiums and apartments. Median prices fell in both categories.

Still, there were a few positive points in the report. Economists had predicted a steeper drop-off in sales, and purchasing figures were revised up for the last five months. The December sales estimate was raised to a 4.91 million annual rate.

...as reported in the New York Times today, February 25, 2008.