Home Sales Dip to a Four-Year Low

[Jul 7, 2007.]

 

New statistics show that sales of existing houses dropped to the lowest level in four years in May. Meanwhile, the median home price has slipped for the 10 th month in a row—a new record.

According to the National Association of Realtors, sales of single-family houses and condominiums decreased 0.3 percent to 5.99 million units last month. That's the slowest rate since way back in June of 2003.

The latest figures indicate that the median price of a house decreased to $223,700. That's down more than two percent from last year. Analysts say the disappointing figures mean that the housing market is distinctly weak. The sales slump hit hardest in the South. There, sales plummeted 3.4 percent. Home sales also declined in the West—down a significant 0.8 percent.

Still, home sales actually increased 5.8 percent in the Northeast and 0.7 percent in the Midwest.

Housing inventories may also be a problem in the months ahead. In May, the inventory of unsold houses increased five percent to 4.43 million units. If sales volume continues its sluggish pace, it would take nearly nine months to exhaust the inventory of available homes. Experts say the inventory rate is the highest it's been since the housing slump of 1992, when the country was combating recession.

The housing market is apparently feeling the effects of both large inventories and chaos in the subprime mortgage market. With lenders invoking stricter rules for loans, prospective buyers are having a tougher time obtaining financing.

Many would-be homeowners, in fact, are apparently postponing buying a home until the housing market improves. Instead of moving into their own quarters, they're living with their parents or taking in roommates.

The United States has not experienced such a housing crisis since the period between 1989 and 1992. Experts predict the median home price will continue to drop until builders scale back the establishment of new homes.

Julie Ann Amos
July 7th 2007
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