February 11, 2009 4:20 PM
- Text
Home Sales Slump For Fifth Straight Month
(CBS/AP)
Sales of existing U.S. homes dropped for a fifth straight month in July, falling to the slowest pace in nearly five years, while home prices fell for a record 12th consecutive month.
The National Association of Realtors reported that sales of existing homes dipped by 0.2 percent last month to a seasonally adjusted annual rate of 5.75 million units.
The median price of a home sold last month slid to $230,200, down by 0.6 percent from the median price a year ago. It marked the 12th consecutive month that home prices have declined compared with a year ago, an all-time high.
Some economists are afraid the housing crisis could drag the U.S. economy into a recession, reports CBS News correspondent Anthony Mason.
Back during the housing boom, when prices were soaring and profits were easy, mortgage companies sprouted like mushrooms. Now that they are falling like flies, some admit the industry created its own problems, adds Mason.
"When they're lending to people with 100 percent financing with no previous credit history, that's just a recipe for trouble," said Andy Roach, a mortgage broker.
But many economists believe the Federal Reserve will ward off a full-blown economic downturn by reducing a key short-term interest rate should financial market conditions fail to stabilize.
Prices had to come down to work off "excess inventory" in the housing market, says Liz Sonders, chief financial strategist for Charles Schwab & Co. Inc.
"It's a boom that became a bubble," she said on CBS News' The Early Show Monday. "Booms don't tend to have the same downside as a bubble burst - but with a bubble burst, like with tech stocks, you have to go through a long, protracted period of recovery. That's what we're doing with housing."
How long is a "long, protracted period of recovery," Early Show co-anchor Harry Smith asked.
"If you look at the inventory statistics, the adjustable rate mortgages, the reset time period for those, you probably have to look into 2008 and 2009 where you really start to get a sense that maybe we've put some kind of bottom in. I think we have to be a little more patient," Sonders replied.
The 0.2 percent drop in July sales, compared with activity in June, marked the fifth straight monthly decline and left sales 9 percent below the level of a year ago. The sales pace was the slowest since November 2002.
By region of the country, sales fell by 2.2 percent in the Midwest and were unchanged in the South. Sales rose by 1.8 percent in the West and 1 percent in the Northeast.
The increase in the Northeast, which also saw the median home price increase, was seen as possibly hopeful sign that the worst of the housing downturn may be ending.
"The rise in sales and prices in the Northeast region on a fairly consistent basis in recent months is promising because this was the first region that underwent sales and price weakness after the boom," said Lawrence Yun, senior economist for the Realtors. "Now, it appears that it will be the first region to climb back, indicating that other regions could follow a similar path."
The National Association of Realtors reported that sales of existing homes dipped by 0.2 percent last month to a seasonally adjusted annual rate of 5.75 million units.
The median price of a home sold last month slid to $230,200, down by 0.6 percent from the median price a year ago. It marked the 12th consecutive month that home prices have declined compared with a year ago, an all-time high.
Some economists are afraid the housing crisis could drag the U.S. economy into a recession, reports CBS News correspondent Anthony Mason.
Back during the housing boom, when prices were soaring and profits were easy, mortgage companies sprouted like mushrooms. Now that they are falling like flies, some admit the industry created its own problems, adds Mason.
"When they're lending to people with 100 percent financing with no previous credit history, that's just a recipe for trouble," said Andy Roach, a mortgage broker.
But many economists believe the Federal Reserve will ward off a full-blown economic downturn by reducing a key short-term interest rate should financial market conditions fail to stabilize.
Prices had to come down to work off "excess inventory" in the housing market, says Liz Sonders, chief financial strategist for Charles Schwab & Co. Inc.
"It's a boom that became a bubble," she said on CBS News' The Early Show Monday. "Booms don't tend to have the same downside as a bubble burst - but with a bubble burst, like with tech stocks, you have to go through a long, protracted period of recovery. That's what we're doing with housing."
How long is a "long, protracted period of recovery," Early Show co-anchor Harry Smith asked.
"If you look at the inventory statistics, the adjustable rate mortgages, the reset time period for those, you probably have to look into 2008 and 2009 where you really start to get a sense that maybe we've put some kind of bottom in. I think we have to be a little more patient," Sonders replied.
The 0.2 percent drop in July sales, compared with activity in June, marked the fifth straight monthly decline and left sales 9 percent below the level of a year ago. The sales pace was the slowest since November 2002.
By region of the country, sales fell by 2.2 percent in the Midwest and were unchanged in the South. Sales rose by 1.8 percent in the West and 1 percent in the Northeast.
The increase in the Northeast, which also saw the median home price increase, was seen as possibly hopeful sign that the worst of the housing downturn may be ending.
"The rise in sales and prices in the Northeast region on a fairly consistent basis in recent months is promising because this was the first region that underwent sales and price weakness after the boom," said Lawrence Yun, senior economist for the Realtors. "Now, it appears that it will be the first region to climb back, indicating that other regions could follow a similar path."
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