Submitted by Naomi M on Thu, 11/29/2007 - 22:23.
More Bad News for Housing Market as Supply of Homes Hits Highest Level in 22 Years
The supply of homes for sale is up to the highest level in 22 years. The National Association of Realtors reported Wednesday sales of existing homes fell for an eighth straight month in October while more properties came on the U.S. housing market.
Sales are down 20.7% in the past year and are down 31% from the peak of 7.21 million two years ago. The inventory of unsold homes rose by 1.9% to 4.45 million, representing a 10.8-month supply, the highest in at least eight years.
For single-family homes alone, the inventory of 10.5 months is the highest since July 1985. The median sales price fell 5.1% in the past year to $207,800. That's the largest year-over-year price decline ever recorded.
If sales do continue to fall because of negative market psychology aided by "sensationalized" news reporting, "it would be a major concern" and "would raise the risk of an economic recession," according to NAR chief economist Lawrence Yun.
"When will the bleeding stop?" wrote Patrick Newport, an economist for Global Insight. "How quickly housing prices drop is crucial in determining the turnaround. Our view is that prices will drop sufficiently for housing activity to hit bottom in mid-2008. Between now and then, though, home sales may drop more than 10% from current levels."
The current sales pace is a bit below the natural trend, said Mike Schenk, senior economist for the Credit Union National Association, a trade group. "We're going to stabilize," he said, then "limp along." It'll be a "long, slow process" of recovery.
Because people grow up, get married, take new jobs and finally die, "there's a natural level of people who have to move," said Bob Walters, chief economist for Quicken Loans. "We've pierced below that."
Where does it hurt the most?
October sales fell 4.4% in the West, where sales have plunged 33% in the past year and are down 48% from the peak. The seizure of the jumbo mortgage market was a major factor in the sales slump in the West, Yun said.
Sales dropped 1.7% in the Midwest and were unchanged in the South and Northeast.
Sales of single-family homes were flat in October at a 4.37 million pace, matching September for the lowest level since January 1998. The median sales price for single-family homes is down a record 6.3% in the past year to $205,700.
Sales of condos fell 9.1% to a 600,000 annual pace. The median sales price rose 4.9% on a year-over-year basis to $223,500.
Source: http://www.marketwatch.com/
Sales are down 20.7% in the past year and are down 31% from the peak of 7.21 million two years ago. The inventory of unsold homes rose by 1.9% to 4.45 million, representing a 10.8-month supply, the highest in at least eight years.
For single-family homes alone, the inventory of 10.5 months is the highest since July 1985. The median sales price fell 5.1% in the past year to $207,800. That's the largest year-over-year price decline ever recorded.
If sales do continue to fall because of negative market psychology aided by "sensationalized" news reporting, "it would be a major concern" and "would raise the risk of an economic recession," according to NAR chief economist Lawrence Yun.
"When will the bleeding stop?" wrote Patrick Newport, an economist for Global Insight. "How quickly housing prices drop is crucial in determining the turnaround. Our view is that prices will drop sufficiently for housing activity to hit bottom in mid-2008. Between now and then, though, home sales may drop more than 10% from current levels."
The current sales pace is a bit below the natural trend, said Mike Schenk, senior economist for the Credit Union National Association, a trade group. "We're going to stabilize," he said, then "limp along." It'll be a "long, slow process" of recovery.
Because people grow up, get married, take new jobs and finally die, "there's a natural level of people who have to move," said Bob Walters, chief economist for Quicken Loans. "We've pierced below that."
Where does it hurt the most?
October sales fell 4.4% in the West, where sales have plunged 33% in the past year and are down 48% from the peak. The seizure of the jumbo mortgage market was a major factor in the sales slump in the West, Yun said.
Sales dropped 1.7% in the Midwest and were unchanged in the South and Northeast.
Sales of single-family homes were flat in October at a 4.37 million pace, matching September for the lowest level since January 1998. The median sales price for single-family homes is down a record 6.3% in the past year to $205,700.
Sales of condos fell 9.1% to a 600,000 annual pace. The median sales price rose 4.9% on a year-over-year basis to $223,500.
Source: http://www.marketwatch.com/
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