Skip to content
Home arrow Public Home Auctionsarrow Home Sales Prices Drop As Traditionally Strong Spring Season Starts

Home Sales Prices Drop As Traditionally Strong Spring Season Starts
E-mail
Written by Tammy D. Kittle   
Wednesday, 29 April 2009
The spring home-buying season got off to a feeble start last month, with sales sliding, prices sinking from their level a year ago, and few holding out hope for a turnaround anytime soon.

Sales of existing single-family homes and condos dropped 2% in March from February, the National Association of Realtors said.

More striking, the median price of an existing home sank 7.7% from March 2007 -- the second-steepest year-over-year price drop since the NAR began keeping such records in 1999.

It was a sign that the housing crisis will likely persist well past the spring buying season as consumers await further price drops and financing becomes even tougher to get.

Even with falling home prices, buyers aren't coming forward. One main reason is the credit crisis, says Orawin Velz of the Mortgage Bankers Association.

"That's the core of why we haven't seen an increase in home sales," she says. "Because of tighter lending standards, you're supposed to have really good credit."

Sales, which fell in March to a seasonally adjusted annual rate of 4.93 million units, from 5.03 million in February, remain 19% below the level of March last year.

Last month's year-to-year price drop of 7.7% was second only to the 8.4% plunge in February.

"Today's decline in prices was a little less than in February, but it's a large decline overall," says Lawrence Yun, the NAR's chief economist.

"It's a sign that some sellers are being more realistic in pricing. But looking ahead for the next few months, sales will be soft."

Several factors are driving the price drops:

*Home loans are harder to get. Banks have reined in their lending practices and are demanding heftier down payments and better credit scores, which is making it hard for would-be buyers to get financing.

One bright spot: Federal initiatives to bolster the housing market mean government lenders will likely be extending more credit.

*Buyers expect more price drops. Many potential home buyers are watching prices slump, but they're holding off in anticipation of further declines and a better bargain.

"Sales are close to bottoming," says Mark Zandi, chief economist of Moody's Economy.com. "The problem now, and for the next six months, is that prices are falling, and people don't want to jump in and catch the falling knife."

*Rising unemployment. Job losses and uncertainty about the economy are limiting the pool of buyers. The unemployment rate rose from 4.8% in February to 5.1% in March.

Some sellers complain that even drastic price reductions aren't enough to tantalize buyers.

"It's depressing," says Anne Berg, a media specialist in New York who has been trying to sell a home in Plantation, Fla., for two years.

"We started the price a couple of years ago at $479,000 and now have lowered it a third time, to just under $300,000. We haven't had any offers. I don't understand why people aren't buying."

Regionally, the steepest price drop was in the West, where the median price of $285,100 was nearly 15% lower than in March 2007. Sales in the West rose 2.2% in March but remain 22% below the level of a year ago.
Last Updated ( Wednesday, 29 April 2009 )