Tim Loehrke
USA Today
David Lereah, chief economist for the Realtors, said he expected price increases to slow this year.
WASHINGTON (AP) — Sales of existing homes set a record for a fifth straight year in 2005 even though the year ended on a weaker note with three straight monthly declines, sending a strong signal that the nation’s housing boom is beginning to cool.
The National Association of Realtors reported that sales of previously owned homes and condominiums dropped 5.7% in December compared with the sales pace in November. The 6.6 million unit annual rate is the lowest level since March 2004 Three consecutive monthly declines have not occurred in more than three years.
Even with the sales weakness in the last three months of the year, total sales in 2005 climbed to an all-time high of 7.072 million units, up 4.2% from the 6.784 million homes and condominiums sold in 2004.
The median price of a home sold in December was $211,000. For all of 2005, home prices were up 12.7%, the biggest increase since a 14.4% rise in 1979.
David Lereah, chief economist for the Realtors, said he expected price increases to slow this year as sales drop about 5%. He said this would represent a cooling housing market but not a collapse as some analysts had feared.
“This is part of the market adjustment we have been discussing with a soft landing in sight for the housing sector,” Lereah said.
By region of the country, sales were down 11.4% in the West, 7.2% in the South and 2.6% in the Midwest. The level of sales was unchanged in the Northeast.
Lereah said he expected sales of existing homes to decline by 5% in 2006 and expected a similar drop for sales of new homes. He said that the 12.7% increase in prices last year would probably slow to a gain of around 5% or 6% in 2006.