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Housing Bubble
June 25th, 2007 2:29 PM

I found this article online and thought that everyone should read it. The article is about the slow down in home sales and the affects.

Home Sales Hit Slowest Pace in 4 Years
Monday June 25, 3:29 pm ET
By Martin Crutsinger, AP Economics Writer

Sales of Existing Homes Drop for Third Straight Month to Slowest Pace in 4 Years; Prices Down

WASHINGTON (AP) -- Sales of existing homes fell for a third straight month in May, dropping to the lowest level in four years as the median sales price declined for a record 10th consecutive month.

In a troubling sign for the future, the inventory of unsold homes shot up to the highest level in 15 years, meaning more downward pressure on prices in the months ahead until the inventory glut is reduced. Sales fell by 0.3 percent in May to a seasonally adjusted annual rate of 5.99 million units, the National Association of Realtors reported Monday. Sales now stand 10.3 percent below where they were a year ago.

The median price of an existing home sold last month fell to $223,700, down 2.1 percent from a year ago. It marked the 10th straight price decline compared with a year ago, the longest stretch on record.

The drop in sales was in line with expectations, providing relief on Wall Street where analysts had been braced for an even worse showing.

Economists predicted home prices would likely head lower in the months ahead because of continued troubles in reducing the stockpile of unsold homes, which rose 5 percent in May to 4.43 million units. That was an 8.9 months supply at the May sales pace, a level that has not been seen since July 1992, the last time the country went through a serious housing slump.

"The only way we are going to chip away at this Mount Everett-sized pile of inventory is by price cuts and so far, sellers haven't been aggressive enough," said Mike Larson, a real estate analyst at Weiss Research. "Don't look for a lasting bottom in the housing market anytime soon."

The sales decline was led by a 3.4 percent drop in the South. Sales also fell in the West, dropping 0.8 percent. Sales rose by 5.8 percent in the Northeast and 0.7 percent in the Midwest.

To read the rest of this article click on this link Home Sales Hit Slowest Pace in 4 Years.

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Posted by Tara Flory on June 25th, 2007 2:29 PMPost a Comment

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