Existing home sales fall for third straight month

[CARLHAYDEN]

Existing home sales fall for third straight month raising worries about housing recovery
 
Sales of existing homes fell for a third straight month in February, pushing sales down to the lowest level since last July. There is concern that the fragile housing rebound could falter, making it harder for the overall economy to recover.

Martin Crutsinger, AP Economics Writer, On Tuesday March 23, 2010, 10:43 am

WASHINGTON (AP) -- Sales of existing homes fell for a third straight month in February, pushing sales down to the lowest level since last July. There is concern that the fragile housing rebound could falter, making it harder for the overall economy to recover.

The National Association of Realtors said Tuesday that sales of previously occupied homes dropped 0.6 percent in February to a seasonally adjusted annual rate of 5.02 million.

The weakness in sales depressed prices with the median home price dropping almost 2 percent from a year ago to $165,100.

Nationally, sales have been declining since November, despite the extension of tax credits for homebuyers. There is a $8,000 credit for first-time buyers and a $6,500 credit for current homeowners who have lived in their property for the past five years.

Buyers must sign sales contracts by the end of April and complete their purchases by the end of June to qualify for the tax credits. So far, there has been little indication that the tax credit extension is generating much activity.

High unemployment and tough lending standards appear to be holding buyers back. That could derail housing as it tries to emerge from the worst downturn in decades and harm the overall economy.

"Without a firm foundation in housing, the economy will struggle to return to normal," said Lawrence Yun, chief economist for the Realtors.

He said it will be critical to see a rebound in sales in coming months to keep inventories from surging and adding further downward pressure on prices.

[opebo]

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High unemployment and tough lending standards appear to be holding buyers back.

Both of these causes are something the government can deal with, the second more easily than the first.  If the government would simply buy all new mortgages created banks would not need to apply 'tough lending standards'.  As for unemployment, it lingers because of inadequate government spending - something which could be improved upon with decent political will.

[phk]

What was the peak of the median home price at the peak of the bubble? $233,000?

[CARLHAYDEN]

What was the peak of the median home price at the peak of the bubble? $233,000?

That's probably about right.

You are wise to select the median rather than the mean, which was much higher.

Also, the California prices were significantly higher than the rest of the nation, thereby pulling up the median you cited.