Single-home sales hit record drop
WASHINGTON (AP) - January 24, 2008 The National Association of Realtors reported that sales of
single-family homes and condominiums dropped by 2.2 percent in
December to a seasonally adjusted annual rate of 4.89 million
units.
For the year, sales of single-family homes were down by 13
percent, the biggest drop since a 17.7 percent plunge in 1982. The
median price for a single-family home dropped 1.8 percent to
$217,000.
That was the first annual price decline on records going back to
1968. Lawrence Yun, the Realtors' chief economist, said it was
likely that the country has not experienced a decline in housing
prices for an entire year since the Great Depression of the 1930s.
The new figures underscored the severity of the slump in
housing, which has been battered for the past two years after
enjoying a boom in which sales set records for five consecutive
years.
The housing bust has sent shock waves through the entire economy
as defaults have risen, resulting in multibillion-dollar loses for
big financial firms whose investments in subprime mortgages have
gone sour.
There is a concern that the housing and credit troubles could be
enough to push the country into a full-blown recession. After
global stock markets experienced a sharp sell-off earlier this
week, the Federal Reserve announced a bold three-quarter point cut
in a key interest rate and held out the promise of more rate cuts
to follow.
The Bush administration and congressional leaders are trying to
quickly wrap up negotiations on a stimulus package in an effort to
boost consumer and business confidence.
For December, sales were down in all regions of the country.
Sales fell by 4.6 percent in the Northeast, 1.7 percent in the
Midwest, 1 percent in the South and 2.1 percent in the West.
The inventory of unsold homes dropped by 7.4 percent, raising
hopes that backlogs that had hit record levels were starting to be
reduced, a key factor necessary to prompt a rebound in the market.
While Yun said he expected sales to start to rebound this
spring, other analysts said housing is likely to remain in the
doldrums throughout most of 2008, reflecting in part the credit
crunch, which has caused lenders to tighten their standards, making
it harder for prospective buyers to qualify for loans.
In other economic news, the Labor Department said Thursday that
the number of laid off workers filing claims for unemployment
benefits fell for a fourth straight week, dropping by 1,000 to
301,000.
Many economists cautioned that they still expected layoffs to
start rising in coming weeks, reflecting the sharp economic
slowdown that has taken place.
The economy, after racing ahead at an annual rate of 4.9 percent
in the July-September quarter, probably slowed to a weak 1 percent
rate in the final three months of 2007 and may even fall into
negative territory in the current January-March quarter.
A recession is often defined as two consecutive quarters of
falling economic output. Many economists believe the risks of a
full-blown downturn are roughly 50-50.
The growing worries about the economy in an election year have
captured the attention of President Bush and congressional leaders
who are working to put together a $150 billion economic stimulus
package that will include tax relief for households and businesses
in an effort to bolster economic activity.
The drop in unemployment applications to 301,000 for the week
ending Jan. 19 left total claims at the lowest level since 300,000
were recorded during the week of Sept. 22.
For the week of Jan. 19, 36 states and territories had increases
in claims while 17 had declines.
The biggest increase occurred in California, up 27,194, an
upsurge blamed on higher layoffs in construction and service
industries, and Florida, with an increase in layoffs of 8,496,
which was attributed in part to higher layoffs in construction.
California and Florida have been particularly hard hit by the
housing slump.