More signs of home sales weakness
Realtors' group report shows lowest level in existing sales since it began keeping records in 1999.
NEW YORK (CNNMoney.com) -- The new year picked up where 2007 left off, as sales of existing homes fell in January to the lowest level in nearly a decade, according to a reading by an industry trade group released Monday.
The National Association of Realtors reported that sales by homeowners fell 0.4% in January to an annual pace of 4.89 million, down from the revised December reading of 4.91 million.
The reading was the lowest since the group began reporting annual sales pace in 1999, down 23.4% from a year earlier. Nevertheless, sales narrowly beat expectations. Economists surveyed by Briefing.com expected the report to show existing home sales slowed to an annual pace of 4.8 million.
Despite beating forecasts, analysts remained skeptical.
"This is more doom and gloom," said Northern Trust chief economist, Paul Kasriel. "The mind set for buyers now is, 'if prices are falling, why do I want to buy an asset that's going down in price?'"
The median price of a home sold during the month fell 4.6% to $201,100 from $210,900 a year earlier. Before the start of the current housing slump, it had been 11 years since prices fell compared to a year earlier.
The median price of a single-family home dropped to the lowest point since February 2005, falling 5.1% to $198,700. The trade group has tracked those sales prices going back to 1989.
The excess supply of homes on the market rose in January. Realtors estimated that there are now 4.2 million homes available for sale, which represents more than a 10-month supply. That is up from the 9.7-month supply in December.
"Homebuilders are doing their part to reduce inventory by slashing production, but demand is still weak," said Kasriel. "Everyone wants to get what the neighbor's house sold for three years ago, but that's just not going to happen."
But the Realtors said that measures to correct the housing crisis have started to show an effect in sales.
"Subprime loans and other risky mortgage products have virtually disappeared form the marketplace," said Lawrence Yun, NAR chief economist. "Over the past five months, this has been reflected in soft but fairly stable home sales."
Yun believes that prices will begin to increase by the end of the year, but Kasriel believed that time frame was a bit optimistic.
"We just have a lot of inventory to work off," he said.
The downturn in housing and home building has hammered the results of the nation's largest builders.
Earlier this month, D.R. Horton (DHI, Fortune 500), the No. 2 home builder by revenue, reported a much steeper-than-expected loss in the fourth quarter. Luxury home builder Toll Brothers (TOL, Fortune 500), the No. 7 builder, reported a sharp drop in sales when it released preliminary numbers at the beginning of this month, saying it is "not yet seeing much light at the end of the tunnel."
That followed a report last month from No. 3 Lennar (LEN, Fortune 500) that showed a $1.25 billion fourth-quarter loss, the largest in the company's history. In addition No. 1 Centex (CTX, Fortune 500), No. 4 Pulte Homes (PHM, Fortune 500) and No. 5 KB Home (KBH, Fortune 500), all reported fiscal fourth-quarter losses far worse than forecasts in January, as did No. 6 Hovnanian Enterprises (HOV, Fortune 500) when it reported fiscal fourth quarter results in December.