Existing Home Sales Down in 2007

Sales of existing homes ended down 12.8 percent from 2006 according to the National Association of Realtors. Home prices also fell in 2007 as the housing slump has resulted in an increase in available homes on the market.

Existing home sales declined in December according to a report released by the National Association of Realtors.

Existing home sales – including single-family, townhomes, condominiums and co-ops – slipped 2.2 percent to a seasonally adjusted annual rate of 4.89 million units in December from a pace of five million in November, and are 22 percent below the 6.27 million-unit level in December 2006.

On a positive note, the realtors group not that for all of 2007 there were 5,652,000 existing-home sales, the fifth highest year on record. However, the total was 12.8 percent below the 6,478,000 transactions recorded in 2006.

Lawrence Yun, NAR chief economist, said the market is experiencing uncharacteristic weakness.

“Home sales remain weak despite improved affordability conditions in many parts of the country, but we could get a quick boost to the market if loan limits are raised in combination with the bold cut in the Fed funds rate,” he said.

Total housing inventory fell 7.4 percent at the end of December to 3.91 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, down from a 10.1-month supply in November.

The housing slump ``may continue to be a drag on growth for a good part of this year,’’ Fed Chairman Ben S. Bernanke testified to the House Budget Committee on Jan. 17.

In an effort to address the slumping economy, Democratic and Republican congressional leaders reached a tentative deal Thursday on tax rebates of $300 to $1,200 per household and business tax cuts to jolt the slumping economy.

To address the mortgage crisis, the package also allows Fannie Mae and Freddie Mac – government-sponsored companies that are the two biggest U.S. financers and guarantors of home loans – to buy home mortgages much larger than the current $417,000 limit. Rep. Barney Frank, D-Mass., and chairman of the House Financial Services Committee, said that lending cap might reach as high as $700,000 in areas with the highest home prices.

The national median existing-home price for all housing types was $208,400 in December, down six percent from a year earlier when the median was $221,600. For all of 2007, the median price was $218,900, down 1.4 percent from a median of $221,900 in 2006.

Single-family home sales declined two percent to a seasonally adjusted annual rate of 4.31 million in December from 4.40 million in November, and are 21.6 percent below 5.50 million-unit level in December 2006. In all of 2007, single-family sales fell 13 percent to 4.94 million.

The median existing single-family home price was $206,500 in December, down 6.5 percent from a year earlier. For all of 2007, the single-family median was $217,800, down 1.8 percent from 2006.

Existing condominium and co-op sales fell 3.3 percent to a seasonally adjusted annual rate of 580,000 units in December from 600,000 in November, and are 24.5 percent below the 768,000-unit pace a year ago. Condo sales for all of 2007 fell 11.0 percent to 713,000 units.

The median existing condo price was $222,200 last month, which is 2.5 percent below December 2006. In all of 2007, the median condo price was $226,400, up 2.0 percent from 2006.

Regionally, existing home sales in the South slipped one percent to an annual pace of 1.97 million in December, and are 20.9 percent below December 2006. The median price in the South was $173,400, down 4.1 percent from a year ago.

Existing home sales in the Midwest declined 1.7 percent in December to a level of 1.16 million and are 20.5 percent below a year ago. The median price in the Midwest was $159,800, which is 3.9 percent lower than December 2006. In the West, existing-home sales fell 2.1 percent to an annual rate of 940,000 in December, and are 24.8 percent below December 2006. The median price in the West was $309,800, down 11.1 percent from a year ago.

Existing-home sales in the Northeast dropped 4.6 percent to an annual rate of 830,000 in December, and are 22.4 percent below a year ago. The median price in the Northeast was $258,600, down 8.9 percent from in December 2006.

Sources: NAR, Bloomberg News