Wednesday, October 25, 2006

Americans Paying Less for Previously Owned Homes

Americans are paying less for previously owned homes than they were a year ago, but the number of such homes sold continues to fall.

The National Association of Realtors reported today that the average price of a previously owned home fell to $220,000 in September, down 2.2 percent from September 2005. At the same time, the pace of home sales slowed to a seasonally adjusted annual rate of 6.2 million, down 1.9 percent from August.

Sales fell even further when compared with September 2005. In the past year, existing home sales slid 14.2 percent, the realtors association said.

The new sales numbers suggest a housing market that is downshifting, but it remains unclear just how much further sales and prices will fall. Market experts are divided over whether housing is just beginning a deep and lengthy correction, or merely leveling off after several years of explosive growth.

The association said the latest statistics indicate that the market is starting to stabilize, but many economists said it is far too early to say that the worst has passed.

The association said that the inventory unsold homes on the market declined to 3.8 million in September from 3.9 million in August, a sign that it found encouraging.

“The good news is that fewer new listings are coming on line,” Thomas M. Stevens, president of the association, wrote in its statement. He predicted prices would pick back up within a few months: “A stable sales pace is expected to draw down the number of listings to a supply balance that will support positive price growth.”

The September report was the second in a row to show falling prices; the August report was the first in more than a decade to show a year-over-year decline in the median price of an existing home.

Despite a small decline in inventories last month, the number of homes for sale remains near historic highs. Many economists believe that with such a large surplus of homes unsold, prices are likely to weaken for some time. At September’s pace, it would take 7.3 months to sell all the existing homes now on the market, the association said.

“A year ago, this ratio was 4.6 months,” said Joshua Shapiro, chief United States economist with MFR, a consulting firm. “And the sharp rise over the spring and summer suggests that pricing will weaken further in the months ahead.”

The data showed that selling a condominium in September was more difficult than selling a single-family home. Condo sales fell by 3.2 percent from August, and inventories rose to an 8.6-month supply. By contrast, single-family home sales fell 1.6 percent while inventories rose to 7.1 months.

Overall existing home sales and prices fell the fastest in the Northeast, by 3.7 percent from August, and median prices there slipped 5.1 percent from a year earlier, to $259,000. In the West, sales volume fell 3.1 percent from August, and prices dropped 4.3 percent from a year earlier, to $332,000. In the Midwest sales decreased 2.8 percent from August; prices dropped 2.3 percent from last year, to $208,000.

The South was the only region where sales picked up, rising 0.4 percent in September. Prices there, however, were 1.6 percent lower than a year ago.

Published: October 25, 2006
New York

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