U.S. sales of previously owned homes declined in March as the housing-market slump continued, but two gauges of home prices provided a glimmer of hope that the downturn might be easing a bit.
Home sales in San Francisco may be down but competition is hot. Stacey Delo reports on how some homes are seeing 10 or more bidders, and in one case 22.
Existing-home sales fell 2% last month to a seasonally adjusted annual rate of 4.93 million, the National Association of Realtors said. The drop followed an increase of 2.9% in February, the first monthly gain since July. Home sales were down 19.3% from the 6.11-million-unit pace recorded in March 2007.
The languid sales pace has pushed inventories of unsold homes to a 9.9 months' supply at current sales rates. That large overhang has put downward pressure on prices for months, especially in areas hit hardest by the housing crisis.
Now, however, there are signs that prices might be starting to stabilize. The median U.S. home price rose to $200,700 last month from a revised $195,600 in February, the Realtors' report said. And the Office of Federal Housing Enterprise Oversight's home-price index showed prices rising a seasonally adjusted 0.6% in February from January, the first monthly gain since June.
Both gauges have their limitations. The Realtors' data reflect a changing mix of homes. The Ofheo index tracks homes purchased with government-backed mortgages, which excludes homes purchased with substandard loans more susceptible to the housing market's swoon.
Still, the data suggest that the declines in sales and prices may be slowing. "While it remains too early to definitively call a bottom, we continue to argue that home sales will stabilize [albeit at very low levels] by midyear," said Stephen Stanley, chief economist at RBS Greenwich Capital, in a note to clients.
Existing-home sales dropped 6.5% in the Midwest last month and 3.5% in the South; they rose 2.2% in the West and Northeast. Single-family home sales fell 2.7%, while sales of condominiums and co-ops rose 3.6%, for a second consecutive increase.
The fate of the nation's housing market could determine the shape and length of the current economic downturn. In an interview, Richard Fisher, president of the Federal Reserve Bank of Dallas, warned that the U.S. may be in for a long period of "anemic growth -- longer than two quarters." But, Mr. Fisher said, "I don't think it needs to be all that deep. We've really weathered a hell of a setback.
"This strikes deep at the heart of the ordinary, hard-working consumer," he said. "They're getting multiple whammies -- slow economic growth, job insecurity, their homes are perceived to be worth less. And they're paying more at the pump and more for food. So the consumer is really getting hammered. And yet they've held up fairly well so far. I would expect them to change their behavioral patterns."
He also said, in the Monday interview, that slower economic growth may not resolve mounting concerns about inflation because he expects only a mild slowdown in world demand. "We've been weakening and we haven't seen the price responses," he said.
By: Kelly Evans & Sudeep Reddy
Wall Street Journal; April 23, 2008
