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Home Sales Slumping Across Nation, State

December 24, 2008 - U.S. home sales in 2008 are destined to be the worst in a decade, and no quick turnaround is anticipated next year, according to November data released Tuesday.

In addition, the national median sales price fell last month by the largest amount on record, the National Association of Realtors reported.

Sales of existing homes nationwide plunged to an annual rate of 4.49 million in November, down 8.6 percent from October and worse than the 4.9 million rate predicted by some economists.

The national median sales price tumbled 13 percent to $181,300, from $208,000 a year ago. The association said it's the lowest median price since February 2004, and the largest decline since record-keeping began 40 years ago.

In Maine, the median sales price declined 8.29 percent last month to $172,415, down from $188,000 in November 2007, the Maine Real Estate Information System said Tuesday. The median sales price indicates that half sold for more than that amount and half sold for less.

Maine's real estate prices typically don't fluctuate as quickly or as much as they do in more densely populated states, explained Marc Chadbourne of Century 21 Nason Realty in Winslow, the information system's past president.

"Maine doesn't see the large swings in appreciation, so you're not going to see the large swings in depreciation," Chadbourne said. "I liken it to climbing a ladder. If you only take one step up, you only have that far to fall."

Still, sales of existing single-family homes in Maine were down about 23 percent last month compared with a year earlier, according to the information system. Figures show 690 Maine houses changed hands last month, 201 fewer than in November 2007.

Across the country, 322,000 homes were sold last month, down 17 percent from a year earlier, according to the national association.

Regional sales declined 18 percent in the Northeast, the association reported. The regional median sales price of $257,700 reflected only a slight dip of 0.1 percent from November 2007.

Distressed properties accounted for 45 percent of all U.S. property sales in November, the association reported.

There were 4.2 million unsold homes on the market last month. At the current sales pace, it would take 11.2 months to sell all the properties for sale in the U.S., matching a record set last spring.

Analysts say the glut is being driven by a massive wave of mortgage foreclosures. And until the inventory of homes falls to more normal levels, the housing slump is likely to persist.

"It's a good time to buy," said Rita Yarnold, owner of Bay Realty Associates in Portland and incoming president of the Maine Association of Realtors.

The deteriorating economy makes the timing of any recovery in sales a moving target. While sales are growing in foreclosure-plagued areas such as Las Vegas and Los Angeles, most of the country is still sinking.

And though mortgage rates dropped to less than 5 percent last week, providing an attractive opportunity for borrowers to refinance, real estate agents say it's too early to tell how much of a sales boost low rates will provide.

"The interest rates aren't helping as much as we had hoped," said Russ Graber, an agent with Coldwell Banker in Des Moines, Iowa. "My guess is you're going to see more refinancing than people moving. I don't think people are going to want to put on more debt."

Making matters worse, lending standards remain tight, the market remains flooded with unsold properties and job losses are mounting.

"Once you get to a point where the economy stops contracting, then those lower mortgage rates could have some traction," said IHS Global Insight economist Brian Bethune.

Meanwhile, the U.S. Commerce Department said November sales of newly built homes fell 2.9 percent from October to 407,000 units, the slowest rate in nearly 18 years. The median price of a new home sold in November was $220,400, a drop of 11.5 percent from a year ago and the biggest year-to-year price decline since March.

The inventory of unsold new homes stood at 374,000 in November, down 7 percent from the October inventory level. JPMorgan Chase analyst Abeil Reinhart called that figure "the only positive news in this report."

Still, there is almost a one-year supply of both new and existing homes at the current sales pace.

From PPH staff and news services December 24, 2008


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