Home Sales Slowest in 4 Years

June 26, 2007 No Comments »

For a third straight month, sales of existing homes fell in May, to the lowest level in four years while the median sales price declined for a record 10th consecutive month.

In even more bad news, the inventory of unsold homes rose to the highest level in 15 years, revealing the continued oversupply of housing nationwide.

According to the National Association of Realtors report, home sales fell 0.3 percent in May to a seasonally adjusted annual rate of 5.99 million units, with sales 10.3 percent below year-ago levels.

The good news is home prices should continue to drop to spark demand, though sellers haven’t been particularly agreeable in dropping asking prices.

Lawrence Yun, senior economist for the Realtors said, “It appears some buyers are simply waiting for more signs of stability before they get serious about getting into the market,” he said. “The lack of buyers’ confidence is a major factor in the lower sales.”

So with the standoff between buyers and sellers bolstering on, we may continue to see bad numbers until one party budges.

Mortgage interest rates have also risen significantly in the last six months, creating another hurdle to the home-buying process, along with harsher financing processes and underwriting at banks and mortgage lenders nationwide.

The sales decline was worst in the South, at 3.4 percent drop, followed by 0.8 percent in the West.  Sales actually rose by 5.8 percent in the Northeast and 0.7 percent in the Midwest, so there were some bright spots.

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