The New York Times-20080125-Home Prices Sank in 2007- and Buyers Hid
Return to: The_New_York_Times-20080125
Home Prices Sank in 2007, and Buyers Hid
The median price of an American single-family home fell in 2007 for the first time in at least four decades, according to the National Association of Realtors, a trade group.
It's the first price decline in many, many years, the group's chief economist, Lawrence Yun, said Thursday. And possibly going back to the Great Depression.
The median price of a single-family home fell 1.8 percent, to $217,800, the first annual decline since reliable records began in 1968.
And even as prices plummeted, buyers vanished. Over all, sales of previously owned single-family homes dropped 13 percent in 2007, the biggest decline in a quarter-century. (The group's survey excludes newly constructed homes.)
Economists now say the housing market, plagued by its worst downturn since the early 1990s, will not bottom out until at least the summer, and even then sales are expected to remain sluggish.
Housing activity remains weak, said Mickey Levy, chief economist at Bank of America. What more can be said?
Last month alone, total sales dipped 2.2 percent from November, slowing to a 4.89 million annual rate. Condominium sales were off 25 percent from the year-ago period.
Home sellers are grappling with a combination of elevated inventories and tighter lending standards, which make it harder for potential buyers to take out a mortgage. Concerns over the health of the economy have not helped: a slowdown may make Americans more reluctant to undertake large purchases.
The weak demand is reflecting uncertainty about the economy, higher unemployment, and expectations prices are going to fall further, Mr. Levy said.
Though the backlog of unsold homes ticked down slightly in December, at least one economist attributed the drop to discouraged homeowners pulling their homes off the market in the face of continued weak demand and falling prices.
We still have a long way to go before prices sink to levels necessary to balance supply and demand in the housing market, the economist, Joshua Shapiro of MFR, wrote in a research note.
The Northeast suffered the steepest decline in sales last month, with purchases down 4.6 percent from November. Prices in the region have fallen 8.9 percent from December 2006.
Compared with December 2006, sales dropped 21 percent in the South, 25 percent in the West, 20 percent in the Midwest and 22 percent in the Northeast.
The median price of a single-family home in December was $206,500, down from $207,300 in November.
[Illustration]CHARTS: Existing-Home Sales: Annual pace of existing singlefamily homes sold during the month, seasonally adjusted.; Home Prices: Median price for existing homes, not seasonally adjusted.(Source: National Association of Realtors) Charts show a line graph and a bar graph for 2006-2007.