Downward Trend in Home Sales Continues in March
The National Association of Realtors (NAR) on Thursday reported that sales of existing homes for the month of March fell short of expectations. The total of 4.7 million units was 3% lower than the revised February total of 4.8 million and just over 6% lower than the March of 2008 total of almost 5 million. Activity within the housing market has reacted strongly to government attempts at lowering interest rates and the $8,000 tax credit awarded to first-time home buyers.
Market analysts say tat first time buyers are vital to the overall market’s recovery because they allow sellers to more easily trade up or down. First-time buyers accounted for a little more than half of sales in March. While sales are showing signs of stabilizing, prices continue to drop, though at a slower rate. Prices rose from February to March, though the national median price for existing homes was $175k, or almost 12.5% lower than it was in March of last year. The February to March price increase, about 4%, was significantly higher than the usual February to March increase of about 2%.
Foreclosures, which generally sell for about 20% less than other homes, accounted for just over half of all sales in March. The Federal Housing Finance Agency (FHFA), meanwhile, released a report on Wednesday that indicated sales in the very crucial single family home sector rose almost 1% from January to February, though are still more than 6% lower than last year. A major concern of many analysts is hidden inventory caused by banks delaying foreclosures or homeowners not putting their homes on the market. They caution that home prices will not hit bottom until 2010’s first quarter, delaying the acceleration of housing starts until then.
One major cause of the falling home prices is the instability in the nation’s labor market. Along with those who are currently unemployed, many workers are hesitant to buy a home in fear that they might lose their jobs. The Labor Dept. reported initial unemployment claims higher than had been projected and continued unemployment claims topped 6 million, marking the 12th week in a row a new record was set.