Rising unemployment and volatility in the stock market continued to pull down the troubled housing market as sales of existing homes tumbled 10.6% in November from the same period a year earlier.
Rising unemployment and volatility in the stock market continued to pull down the troubled housing market as sales of existing homes tumbled 10.6% in November from the same period a year earlier.
The latest data, released Wednesday from the National Association of Realtors in Washington, showed that sales of single family homes, townhouses, condominiums and co-ops fell to a seasonally adjusted rate of 4.49 million units in November, down 8.6% from October and 10.6% from a year ago.
At the same time, median home prices fell 13.2% to $181,300 in November from the same month a year earlier.
Much of the price decline was attributed to sales of foreclosed and distressed properties.
“The quickly deteriorating conditions in the job market, stock market and consumer confidence in October and November have knocked down home sales to another level,” Lawrence Yun, chief economist at NAR, said in a statement
“We hope the home sales impact from the stock market crash turns out to be short-lived, as was the case in 1987 and 2001.”
Mr. Yun said the data reinforces the need for incentives to entice homebuyers back into the market.
“It also depends on how effectively Congress and the new administration can help facilitate the short sales process and unclog the mortgage pipeline — impediments remain for some buyers with good credit,” he said.
Still, there was some increased sales activity in California, Nevada, Arizona and Florida in November, from the previous month, largely due to bargain hunters chasing after distressed properties.
The national sales decline came despite falling mortgage rates.
Indeed, the national average rate for a 30-year fixed-rate mortgage declined to 6.09% in November, from 6.2% in October, according to Freddie Mac, located in McLean, Va.
And last week, it plummeted to 5.19% — its lowest level since at least 1971.
“We need more than low interest rates to encourage enough buyers to enter the market and meaningfully draw down inventory, which would stabilize home prices ... and help the economy to recover,” Charles McMillan, president of NAR and a broker with Coldwell Banker Real Estate Corp. of Irving, Texas, said in a statement.
He’s calling on the government to enact a housing stimulus program.
Mr. Yun cautioned that there could be serious repercussions if housing stimulus is delayed.
“Falling home prices would lead to faster contraction in consumer spending and further deterioration in bank balance sheets,” he said in the statement.
“More importantly, falling home values would lead to higher loan defaults, including those recently modified distressed mortgages.”
Sales of existing single-family homes fell to a seasonally adjusted rate of 4.02 million in November, down 8% from October and down 8.8% from a year ago.
Sales of existing condos and co-ops dropped to a seasonally adjusted rate of 470,000 units in November, down 13% from October and down 23.1% from a year earlier.
