- The Washington Times - Tuesday, January 1, 2008

ASSOCIATED PRESS

Sales of previously owned homes nudged up in November, but that didn’t improve the broader picture of a feeble housing market racked by record-high foreclosures and harder-to-get credit.

The National Association of Realtors reported yesterday that sales of existing single-family homes, condominiums and town houses rose 0.4 percent in November from October to a seasonally adjusted annual rate of 5 million units. Even with the small increase, the pace of sales was the second-lowest on record going back to 1999. The lowest pace — 4.98 million — was registered in October.

“There’s little reason to pop open any champagne corks,” said Michael Larson, a real-estate analyst at Weiss Research Inc.

Sales were down 20 percent from November 2006, underscoring the problems plaguing the housing sector.

Economists were calling for sales to either move up slightly or hold steady for November.

Home prices continued to sink.

The median price of a home sold in November was $210,200. That marked a 3.3 percent drop from a year earlier. It was the fifth biggest annual decline on record. The median price is where half sell for more and half sell for less.

By region, sales were mixed.

Existing home sales jumped 10.3 percent in November from October in the West. They were flat in the Midwest. However, they fell by 2 percent in the South and by 3.3 percent in the Northeast.

“There is no doubt that housing is weak and will be weak in 2008,” said economist Ken Mayland, president of ClearView Economics.

The inventory of unsold homes in November was 4.27 million homes. At the current sales pace, it would take 10.3 months to exhaust that pool.

“Inventory is still high and further reduction in prices may be required in some areas to induce buyers back into the market,” said the association’s chief economist, Lawrence Yun.

A dip in 30-year mortgage rates in November probably helped give existing-home sales the small boost, the association suggested. Mr. Yun thought the small increase could be taken as a sign that the market might be stabilizing. That said, previous signs of stabilization earlier in the year were all dashed.

A credit crunch that took a turn for the worse in the summer has aggravated housing problems. It has made it more difficult for people to secure financing to buy a home.

The housing market has been suffering through a severe slump after five years of record-breaking activity from 2001 through 2005. Sales turned weak, as did home prices. The boom-to-bust situation has increased dangers to the economy as a whole and has been especially hard on some homeowners.

Foreclosures have soared to record highs. A drop in home prices left some people stuck with balances on their home mortgages that eclipsed the worth of their home. Other home buyers were clobbered as low introductory rates on their mortgages jumped to much higher rates that they couldn’t afford.

“A significant number of mortgages reset in early 2008 will likely increase delinquencies and foreclosures driving prices lower and pushing buyers away,” said Benjamin Reitzes of BMO Capital Markets. “This could get even worse before it gets better.”

The housing and mortgage meltdowns have raised the odds that the country will slip into a recession. The situation has given Democrats and Republicans — including those who want to be the next president — plenty of opportunities to spread blame.

The economy’s growth is expected to have slowed sharply to a pace of 1.5 percent or less in the final three months of 2007. The big worry is that housing and credit troubles will force people to cut back on spending and businesses to cut back on hiring and capital investment, throwing the economy into a tailspin.

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