Home Prices Fall for 9th Straight Month

[BobbyD]

AP
Home Prices Fall for 9th Straight Month
Friday May 25, 12:09 pm ET

By Martin Crutsinger, AP Economics Writer
Sales of Existing Homes Fall to the Slowest Pace in Nearly 4 Years

WASHINGTON (AP) — 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.
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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 South and 0.7 percent in the Midwest.

The drop in existing home sales for April followed news that sales of new homes surged by 16.2 percent last month, the biggest one-month rise in 14 years. However, that big jump was accompanied by a record drop in median new home prices. Analysts saw that as a sign that builders are getting more aggressive in slashing prices as a way to move a glut of unsold new homes.

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.

[waiting hawk]

Damn sunny weather.

[waiting hawk]

Damn sunny weather.

[jepsd]

For a Goldilocks economy, the weather needs to be just right…

Sorry if it is a bit confusing, but I’m not sure whether it was too hot or too cold in February and March. Seems to be a conflict. Hmmmm.

Jan. 30 (Bloomberg) — U.S. retailers’ sales rose 4.9 percent last week compared with the same period a year earlier as colder weather helped lift sales of gloves and scarves, the International Council of Shopping Centers said.

March 8 (Bloomberg) — The coldest February since 1979 caused U.S. retailers’ sales to grow at the slowest pace in three months as consumers delayed purchases of spring merchandise.

March 23 (Bloomberg) — Sales of previously owned homes in the U.S. unexpectedly surged last month by the most in three years, a sign that the housing market is probably past the worst of its slump.
Warm Weather
Last month’s jump in sales partially reflects the closing of contracts signed in December, when unseasonably warm weather brought out more house hunters, David Lereah, the Realtors’ chief economist, said at a briefing in Washington.

April 16 (Bloomberg) — Retail sales in the U.S. rose in March by the most in three months as rising incomes and better weather ensured consumers would continue to drive economic growth.

April 24 (Bloomberg) — Sales of previously owned homes in the U.S. declined more than forecast in March to the lowest level in almost four years, delaying housing’s recovery from a slump that’s shown some signs of reaching bottom.
The decline in sales, while partly weather related, may renew concern that the housing recession will linger and put at risk the Federal Reserve’s forecast for moderate economic growth.

May 8 (Bloomberg) — U.S. retailers’ sales probably fell for the first time in four years last month as an earlier Easter and the coldest April in a decade discouraged purchases of lightweight clothing, gifts and garden equipment.

[jepsd]

For a Goldilocks economy, the weather needs to be just right…

Sorry if it is a bit confusing, but I’m not sure whether it was too hot or too cold in February and March. Seems to be a conflict. Hmmmm.

Jan. 30 (Bloomberg) — U.S. retailers’ sales rose 4.9 percent last week compared with the same period a year earlier as colder weather helped lift sales of gloves and scarves, the International Council of Shopping Centers said.

March 8 (Bloomberg) — The coldest February since 1979 caused U.S. retailers’ sales to grow at the slowest pace in three months as consumers delayed purchases of spring merchandise.

March 23 (Bloomberg) — Sales of previously owned homes in the U.S. unexpectedly surged last month by the most in three years, a sign that the housing market is probably past the worst of its slump.
Warm Weather
Last month’s jump in sales partially reflects the closing of contracts signed in December, when unseasonably warm weather brought out more house hunters, David Lereah, the Realtors’ chief economist, said at a briefing in Washington.

April 16 (Bloomberg) — Retail sales in the U.S. rose in March by the most in three months as rising incomes and better weather ensured consumers would continue to drive economic growth.

April 24 (Bloomberg) — Sales of previously owned homes in the U.S. declined more than forecast in March to the lowest level in almost four years, delaying housing’s recovery from a slump that’s shown some signs of reaching bottom.
The decline in sales, while partly weather related, may renew concern that the housing recession will linger and put at risk the Federal Reserve’s forecast for moderate economic growth.

May 8 (Bloomberg) — U.S. retailers’ sales probably fell for the first time in four years last month as an earlier Easter and the coldest April in a decade discouraged purchases of lightweight clothing, gifts and garden equipment.

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