US home resales fall to 9-year low
Foreclosures add to housing glut
WASHINGTON - Sales of existing homes in the United States fell in January to the lowest level since records began nine years ago, and prices slid for the sixth time in seven months, posing a threat to consumer spending, the largest part of the economy.
Resales declined 0.4 percent, less than forecast, to an annual rate of 4.89 million from a revised 4.91 million in December that was higher than previously reported, the National Association of Realtors said yesterday.
The figures indicate declines in home prices so far aren't sufficient to entice more buyers. Former Federal Reserve chairman Alan Greenspan said yesterday that the deepening rout in housing is having a "broader effect" on spending, and that a recession this year may be deeper than previous downturns.
"The Federal Reserve's efforts to restore the mortgage market so credit is available so people can buy houses has largely failed," Peter Morici, an economics professor at the University of Maryland, said. "There really isn't a lot of hope that things are going to turn around soon."
Economists had forecast home resales would fall 1.8 percent to an annual rate of 4.8 million, according to a Bloomberg News survey. Estimates ranged from 4.65 million to 5 million.
The Standard & Poor's Supercomposite Homebuilding Index rose following the report. The measure was up 2.2 percent to close at 347.38.
Mounting foreclosures are adding to a glut of unsold homes that is driving down property values. The number of homes for sale at the end of January rose 5.5 percent to 4.2 million. At the reported sales pace, that represents 10.3 months' supply, compared with 9.7 months in December.
"The past five months' sales activity has been very soft, but stable," said Lawrence Yun, the real estate agents group's chief economist. A fiscal stimulus that included tax cuts and relaxed restrictions on so-called jumbo mortgage loans may lead to better sales late this year, he said.
Elevated inventories are driving down prices and causing some potential buyers to stay on the sideline to see if prices will go down further.
The median sales price fell 4.6 percent to $201,100 from January 2007. The median cost of a single-family home decreased 5.1 percent to $198,700, while that of condominiums and coops fell 1 percent to $220,400.
"The general trend is down, especially in home sales," Anirvan Banerji, director of research for the Economic Cycle Research Institute in New York, said. "There is quite a bit of overhang in inventory."
"There is more adjustment that is required" in housing, Greenspan told a conference in Abu Dhabi yesterday. "There is a broader effect on consumer expenditures."
Resales fell in three of four regions, led by a 3.6 percent drop in the Northeast. They declined 2.1 percent in the West and 0.5 percent in the South. Sales were 3.4 percent higher in the Midwest.
Sales of single-family homes increased 0.5 percent to a 4.34 million pace from a 10-year low in December, according to yesterday's report. Sales of condos and coops fell 6.5 percent to an annual rate of 550,000.
The Commerce Department is scheduled to release the January report on new home sales tomorrow. While economists forecast a decline, some measures indicate demand for new homes may be near the bottom.
