Too slow pace by Claudia Sonea

On Monday the National Association of Realtors reported that sales of existing homes fell for the sixth straight month in January. Single-family homes and condominiums dropped by 0.4 percent last month to an annual rate of 4.89 million units- the slowest sales pace on record, while median home prices were also down. The forecast for the months ahead shows further price declines due to high levels of unsold homes. For a home sold in January the median price was $201,100, a drop of 4.6 percent from a year ago and according to analysts the inventory of unsold homes show it will take 10.3 months to sell the 4.19 million homes on the market at this sales pace. By comparison with December it grew 0.6 percent and taking into account that sales are weak (in all parts of the country in January except the Midwest, where sales posted an increase of 3.4 percent. Sales dropped by 3.6 percent in the Northeast, 2.1 percent in the West and 0.5 percent in the South), inventories at high levels the prices are bound to fall, says Joel Naroff, chief economist at Naroff Economic Advisors. Analysts blame it on the tide of mortgage foreclosures that is pushing even more unsold homes back on the market already crowded. In 2007 sales of existing homes fell by 12.7 recording the biggest decline in 25 years. Moreover, the prices are down 20 percent from their all-time record in 2005, the final year of a five-year housing boom that saw sales and prices reaching record levels. The severe credit crunch was created by financial institutions tightening their lending standards in reaction to their multibillion-dollar losses on mortgages that have gone into default, recounts Michael Gregory, an economist at BMO Capital Markets. Patrick Newport, an economist at Global Insight, revealed that condo prices rose more sharply than single-family home prices from 2000 to 2006 but have fallen less in the current downturn, but buyers won't jump in until condo prices drop more. Politics like always stepped in and Sen. Charles Schumer, D-N.Y., pointed out that Congress and the administration should see that more needs to be done to help the distressed housing market. Lawrence Yun, chief economist for the Realtors, said the housing sections of the $168 billion economic stimulus bill passed earlier this month, raising the caps of the size of loans that can be backed by Fannie Mae and Freddie Mac and the Federal Housing Administration, an increase expected to provide help in high-cost areas of the country such as California. However most of the analysts are still quite pessimistic and expect for the housing until late this year or possibly early 2009. Stay connected and find more.

related story: http://news.yahoo.com/s/ap/20080225/ap_on_bi_ge/economy;_ylt=AjWG8uOqdoP6BFAs8x.l9r2s0NUE

by Claudia Sonea for PocketNews (http://pocketnews.tv)

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