Martin Crutsinger
USA Today
The National Association of Realtors said Friday that single-family home sales dropped 1% to 4.89 million units, matching the all-time low set in January. These records go back to 1999.
Inventories of unsold homes surged 10.5% to 4.55 million units at the end of April. At the current sales pace that would put the supply of homes at 11.2 months’ worth, highest since the association began tracking single family and condo properties together in 1999.
For single family homes, at the current sales pace there were 10.7 months’ worth, the biggest supply since June 1985 when it stood at 11.4 months.
The April sales drop was slightly smaller than had been expected. The housing industry is being battered by a prolonged slump that has seen sales and prices decline and mortgage foreclosures soar, the aftermath of a five-year housing boom.
The median price for an existing home dropped 8.5%, compared to a year ago, to $200,700. Analysts predicted further price declines given the huge backlog of unsold homes.
Twice as many Americans expect the value of their homes to fall in the next 12 months than a year ago, while price rises in the next five years will fail to keep pace with inflation, according to a survey released Friday.
The Reuters/University of Michigan report is the latest indicator of grim sentiment among consumers, who have been hit hard by the worst housing slump since the Depression, record energy costs and a shrinking job market.
The results showed the proportion of respondents who expect their home’s value to decline during the year ahead rose to 28%.
Considering the record declines in home prices in recent months, 28% might seem mild, but it is double the 14% registered in a survey a year ago, showing how deeply seated the negative sentiment has become.
“The data underscore the self-perpetuating dynamic now tilted toward declines,” the report said.
The survey data was based on telephone interviews conducted in late April and early May with 392 people.
It showed just 17% anticipated that the value of their homes would increase, vs. 35% recorded a year ago. Homeowners’ expectations for the longer term have also deteriorated.
The proportion of homeowners in May anticipating increases in house prices in the next five years fell to 58% from 65%.
The news gets worse when inflation is factored in. The average annual gains they expect over the next five years slid to 2.5% from 3.9%.
Consumers’ five-year inflation expectations, which rose this month to 3.3%, according to last week’s Reuters/University of Michigan consumer confidence report. That was the highest level of five-year inflation expectations since August 1996.
Sales were down the most in the Midwest, a drop of 6%, followed by a 4.4% decline in the Northeast. Sales were up 6.4% in the West, a region of the country where prices fell by the sharpest amount, and were unchanged in the South.
Even with the weak results for April, Lawrence Yun, chief economist for the Realtors, said he saw reasons for optimism for the second half of this year as more types of mortgages become available as industry and the government respond to a severe credit crunch that began last August.
“I would encourage buyers who were disappointed by poor mortgage options to take another look at the market because the lending changes are significant,” he said.