Home resales fell to a 5.99 million annual rate, a 2.6 percent decrease from a 6.15 million pace in March, the National Association of Realtors said Friday.
The drop in demand rained on brighter news a day earlier, when the government reported sales of new homes during April surged 16.2 percent.
The 5.99 million pace of existing-home sales was the lowest since the 5.94 million in June 2003, NAR said.
“This suggests the housing market correction will continue, as expected, through at least the remainder of the year,” Lehman Brothers economist Drew Matus said in a note to clients.
The April resales level was below Wall Street expectations of a 6.18 million sales rate for previously owned homes. NAR senior economist Lawrence Yun had anticipated slower demand, however, pointing out that many subprime loan products have dried up.
“In addition, increased scrutiny by lenders is stopping risky mortgage origination, which is good for both consumers and the lending community,” Yun said. “Fortunately, a wide availability of conventional mortgage products and the 4.5 million jobs created over the past 24 months will help to stabilize the market going forward.”
The Federal Reserve’s latest quarterly survey of banks’ senior loan officers, conducted in April and released last week, showed lenders tightened standards on subprime and nontraditional mortgages.
“We are not at all surprised that home sales would be weak in April in particular and most likely all spring, as uncertainty surrounding the subprime mortgage situation definitely appears to be encouraging potential buyers to sit on their hands awhile longer to see what the market will look like when the dust clears,” wrote Stephen Stanley, chief economist at RBS Greenwich Capital Markets.
The NAR reported inventories of previously owned homes rose by 10.4 percent at the end of April to 4.20 million available for sale, an 8.4-month supply at the current sales pace. That’s way up from a 7.4-month supply at the end of March.
The median price for a home previously owned was $220,500 in April, down 0.9 percent from $222,600 in April 2006 but above March 2007’s $217,400. Sales were weak in all parts of the country. The Northeast experienced a fall of 8.8 percent in April from the March sales pace. Sales were down 1.7 percent in the West, 1.2 percent in the South and 0.7 percent in the Midwest.
Source: rockymountainnews.com
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