Sales of existing homes fell more than expected in June to their lowest level in at least nine years, the National Association of Realtors said Thursday, as buyers showed little interest amid falling real estate prices and uncertainty about jobs and the economy.
Home and condo resales fell 2.6% from May to an annual rate of 4.86 million, the lowest since the NAR began tracking the series in 1999. Economists expected 4.95 million. Sales sank 16% vs. a year earlier.
Rising mortgage rates, tighter lending standards, job losses and stagnant wages are discouraging even credit-worthy would-be homebuyers.
The median home price rose 3.5% from May to $215,000 but was still 6.1% below June 2007.
"There's a whole multitude of factors that are weighing on home sales," said Mark Vitner, a senior economist at Wachovia.
Separately, new claims for jobless claims rose by 34,000 last week to 406,000, the Labor Department said Thursday. That matches late March's post-Hurricane Katrina peak.
"The economy is continuing to operate at a pace that's just slightly strong enough to keep us out of a recession," said Vitner said.
Employers have slashed payrolls for six straight months while soaring energy and food prices have forced consumers to cut spending on cars, appliances and other big-ticket items, including homes.
Home builder Ryland Group (NYSE:RYL - News) late Wednesday reported a huge second-quarter loss -- far worse than forecasts -- on write-downs and weak demand. Shares fell 19%.
Ford (NYSE:F - News) retreated 15% on a record $8.7 billion loss for the second quarter. Chipotle Mexican Grill (NYSE:CMG - News) fell 20% after missing profit views.
Existing-home sales fell 6.6% in the Northeast, 3.4% in the Midwest and 3.1% in the South. Western sales rose 1% as banks dumped repossessed homes at low prices.
"I think we're seeing the bottom of it in areas where prices went up the quickest and came down the fastest," said Bob Moulton, president of the Americana Mortgage Group. He added that sales appear to be rising in formerly dormant markets such as Las Vegas and Florida.
But the slump will linger in many areas as foreclosures flood more homes on an already-soggy market.
The inventory of homes for sale was little changed at 4.49 million, NAR said. But the slower pace of sales means that it would take 11.1 months to clear the existing inventory, just shy of April's record 11.2.
"The housing correction is still going to continue for a while," said Scott Brown, chief economist at Raymond James. "Inventories have to come down some."
Stocks fell on the weak economic data and corporate reports. The Dow slid 2.4%, the S&P 500 2.3% and the Nasdaq 2%. Home builders, financials and consumer-related groups led the decline.
Source: http://news.yahoo.com/s/ibd/20080724/bs_ibd_ibd/20080724general01;_ylt
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