Home price slump continues
Realtors report that year-over-year slide hit its sixth straight month in January despite pickup in sales pace.
NEW YORK (CNNMoney.com) -- Housing prices continued to fall in the latest reading on the battered real estate market released Tuesday from an industry trade group.
The median price of an existing home sold in January was down 3.1 percent from a year earlier, according to the National Association of Realtors.
It marked the sixth straight month that prices have shown that year-over-year drop, a relatively rare condition for home prices before the current slide. Before the Realtor's price readings showed a year-over-year drop for August sales, it had gone more than 11 years without that kind of drop.
The median price, the price at which half the homes sell for more and half sell for less, is now down 8.5 percent from the record high reached in July 2006. And the three biggest year-over-year declines on record have now been recorded in the last four months, with January's decline just behind the 4.4 percent drop in October and a 3.4 percent fall in November.
The lower prices apparently are helping to draw more buyers to the market. The pace of home sales rose 3 percent from December, coming in at an annual rate of 6.46 million homes. But that was also down 4.3 percent from year-earlier levels.
"It's just like any market, when there's price depreciation, buyers are more likely to come into the market place," said Wachovia economist Phillip Neuhart. "I think prices will be flat to slightly negative this year. I don't think we're going to see any imminent recovery."
The prices have been hurt by a glut of both new and existing homes on the market available for sale. The inventory of homes in the latest report rose 2.9 percent from December to 3.55 million. That's up 23 percent from the supply of existing homes on the market a year ago, although its down 8 percent from the record high seen in July.
The glut of homes for sale was greatly fed by the building boom of 2004 and 2005, rather than the more typical cause of a glut of homes that comes from an downturn in the economy or employment.
Pat Vredevoogd Combs, a Realtor from Grand Rapids, Mich. and president of the national trade group, said the pickup in sales activity is important in restoring confidence to buyers and sellers in the market.
"The market is trending up from its low last fall, and that is important in restoring confidence to buyers who've been on the sidelines," she said in the group's statement.
A government report on new home sales and prices is due out Wednesday. While new homes are only a fraction of the overall real estate market, that is a more closely watched report because it is more of a leading indicator. New home sales are recorded at the time a sales contract is signed, while existing home sales readings are taken at the time of the closing, typically a month or two after a sales contract is agreed upon.
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