U.S. existing home sales lowest in 9 years

Pacific Business News

Existing home sales plummeted to the lowest level in nine years nationwide, as the housing market battles a critical credit crunch and a flood of homes listed for sale, the National Association of Realtors said Monday.

The seasonally adjusted annual rate dropped to 4.89 million homes last month, the lowest recorded since 1999, when the national association began tracking the activity.

And the median home price -- meaning half the homes sold for more, the other half for less -- declined for the fifth-consecutive month to $201,100, a 4.6 percent drop from $210,900 a year ago.

The elimination of subprime loans, considered the primary cause for the housing meltdown, has greatly slowed the market compared to previous years, industry leaders say.

"Subprime loans and other risky mortgage products have virtually disappeared from the marketplace, and over the past five months, this has been reflected in soft but fairly stable home sales," NAR chief economist Lawrence Yun said in a news release.

NAR president Richard Gaylord of Long Beach, Calif., says some home buyers, especially those in higher-priced markets, are waiting for higher limits on conventional loans.

"Once buyers have greater access to higher loan limits, it will take a few months for increased shopping activity to translate into higher sales," he said in a news release. "We should see some movement of pent-up demand by this summer, but higher loan limits need to be implemented fully and promptly to have maximum benefit."

Existing home sales -- including condominiums and town homes -- dropped in all four regions of the nation, according to the 1.3 million-member association. In the West, existing home sales tumbled 28.5 percent from a year ago.

Some economists are less optimistic of a quick turnaround, citing a 10.3-month supply of homes on the market nationwide -- about double the inventory a few years ago, according to an Associated Press report.