Resale of homes dips to a new low

Resale of homes dips to a new low

 

Sales of previously owned homes in the US fell in April, matching a record low and signalling no let-up in the housing recession.

 

Purchases declined one per cent to a higher than forecast annual rate of 4.89 million from 4.94 million in March, the National Association of Realtors said yesterday in Washington. The median price dropped 8 per cent from April last year, the second-biggest decline.

 

Defaults on sub-prime mortgages have prompted lenders to restrict credit, while falling property values have given buyers who are still able to get financing reason to delay purchases. Mounting foreclosures will add to the glut of unsold houses on the market, prolonging the real-estate slump and hurting growth.

 

‘There is no indication that things are improving,’ said Christopher Low, chief economist at FTN Financial here, who forecast sales would drop to a 4.9 million pace. ‘Inventories will stay out of balance at least until the end of 2009 and prices will keep falling.’ Resales were forecast to fall 1.6 per cent to a 4.85 million annual rate, according to the median forecast of 67 economists in a Bloomberg News survey. Estimates ranged from 4.7 million to 4.95 million. April’s sales matched the pace reached in January as the lowest since comparable records began in 1999.

 

Sales were down 18 per cent compared with April 2007.

 

The number of previously owned unsold homes on the market at the end of April jumped to 4.55 million, up from 4.12 million in March. The total represented 11.2 months’ supply at the current sales pace, the highest on record and up from 10 months at the end of the prior month. The agents group has said that a five to six month’s supply reflects a balanced market.

 

The median price of an existing home fell to US$202,300 from US$219,900 in April 2007.

 

Existing home sales account for about 85 per cent of the US housing market while new home sales make up the rest. Monthly figures on resales are compiled from contract closings and may reflect sales agreed upon weeks or months earlier.

 

Purchases of new homes, which are recorded when a contract is signed, are considered a more timely barometer of the market. The Commerce Department’s report is due next week.

 

Yesterday’s report showed resales of single-family homes dropped 0.5 per cent to an annual rate of 4.34 million. Sales of condos and co-ops declined 5.2 per cent to a 550,000 rate.

 

Purchases decreased in two of four regions, led by a 6 per cent decline in the Midwest. — Bloomberg

 

Source: Business Times

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