Existing-home sales in the United States fell to the lowest level in nearly a decade, the National Association of Realtors (NAR) reported on Monday.Sales of total previously-owned homes, including single-family, town homes, condominiums and co-ops, eased by 0.4% to a seasonally adjusted annual rate of 4.89 million units in January from an upwardly revised level of 4.91 million in December, and are 23.4% below the 6.44 million-unit pace in January 2007.
Sales were weak in all parts of the country except the Midwest, where sales posted an increase of 3.4%. Sales dropped by 3.6% in the Northeast, 2.1% in the West and 0.5% in the West.
Lawrence Yun, NAR chief economist, said many potential buyers remain on the sidelines.
“Subprime loans and other risky mortgage products have virtually disappeared from the marketplace, and over the past five months, this has been reflected in soft but fairly stable home sales,” he said. “As the increased limits for FHA and conventional loans are implemented, more buyers will have access to safer FHA loans and lower interest rate loans in high-cost areas, which could lead to steadily higher home sales later in the year.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.76% in January from 6.10% in December; the rate was 6.22% in January 2007. Last week, Freddie Mac reported the 30-year fixed rate rose to 6.04%.
As sales decreased, prices plunged. The national median existing-home price for all housing types was $201,100 in January, down 4.6% from a year ago when the median was $210,900.
Because the slowdown in sales is greater in high-cost markets, there is a downward pull to the national median from a year ago when there were relatively more sales in higher priced areas.
The median price is the point at which half of existing homes are sold for more and half sold for less.
NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, California, said some buyers in high-cost are waiting for higher limits on conventional loans.
“Keep in mind the biggest slowdown in home sales last year was in high-cost markets, which were hard-hit by the credit crunch and notably higher interest rates for jumbo loans, but relief is on the way,” he said.
“Once buyers have greater access to higher loan limits, it will take a few months for increased shopping activity to translate into higher sales,” Gaylord said. “We should see some movement of pent-up demand by this summer, but higher loan limits need to be implemented fully and promptly to have maximum benefit.”
Total housing inventory rose 5.5% at the end of January to 4.19 million existing homes available for sale, which represents a 10.3-month supply at the current sales pace, up from a 9.7-month supply in December.
The once-sizzling housing market has cooled off since last year. Falling prices and rising interest rates have made many borrowers hard to keep up with their mortgage payments.
As late payments and foreclosures are soaring, banks and other lenders have tightened credit standards significantly. Analysts are worried that the tightening credit and the deepening housing slump could be enough to drag the economy into a recession. (Xinhua)