January 26, 2009 (Bloomberg) Sales of previously owned homes in the US and around the Charlotte NC Real Estate areas unexpectedly rose from a record low, propelled by the biggest slump in prices since the Great Depression as foreclosures surged. Purchases rose 6.5% to an annual rate of 4.7 4 million from 4.4 5 million in November. That was less than previously estimated, the National Association of Realtors said that today in Washington area median prices dropped 15% from a year ago, the biggest climb since records began in 1968 and probably the biggest in seven decades, according to the group. You have to put it in the context of an even steeper decline from the previous month, said David Sloan, a senior economist at 4cast Inc. in New York, who had the highest projection in a Bloomberg News Survey. The net trend is still negative. It does seem that some cheap prices are attracting buyers. I don't think it's a clear sign of a revival in the housing market. The housing market is very weak. The housing slump at the center of the global credit crisis and economic downturn is likely to persist into 2009, hurting companies such as Home Depot Inc. Pres. Barack Obama has pledged to stem foreclosures and boost job creation to break the longest recession in a quarter century. The index of leading economic indicators unexpectedly increased in December as the money supply expanded, and a report from the Conference Board, a New York-based research group, showed today. The 3% increase was the first gain in six months and masked signs of a worsening recession. The index points to the direction of the economy over the next 3 to 6 months.
Resales were forecast to fall to a 4.4 million annual rate according to the median estimate of 70 economists in a Bloomberg News Survey. Estimates range from 4.2 million to 4.6 million. Sales were down 3.5% compared with a year earlier. Resale’s averaged 4.91 million in 2008 down 13% from 2007 and the fewest in 11 years. Home Depot, the world's largest home improvement retailer, announced today it will cut 7000 associate jobs and will freeze the salaries of all its officers as the housing slump persists. The number of previously owned unsold homes on the market at the end of December represented 9.3 months worth at the current sales price, down from 11.2 months at the end of the prior month. The median price of an existing home decreased 9.3% in 2008 from the prior year, also the biggest decline since records began and the biggest since the Great Depression. Single-family home resale’s increased 7% to an annual rate of 4.26 million. Sales of condos and co-ops rose 2.1% to a 480,000 rate. The rebound last month was led by a distressed property related jump in the West, including California, Nevada, and Arizona, the NAR said. Sales of distressed properties accounted for about 45% of all home sales last month. Home sales have been following since 2005 prices peaked in 2006. Property values are down about 23% according to the S&P/Case- Shiller index covering 20 metropolitan areas. President Barack Obama last week pressed congressional leaders to reach a consensus on an $825 billion stimulus package that would regenerate job growth, cut taxes, and spur spending on infrastructure, saying it appears we are on target to get legislation passed by mid-January. Obama will use up to $100 billion of the remaining half of the $700 billion financial risk funds to ease the mortgage-foreclosure crisis, Lawrence Summers, his top economic adviser said in a letter to lawmakers on January 15. Mounting foreclosures triggered a credit crisis which in turn has deepened the recession that began in 2007 and shows no sign of letting up. The economy lost 2.6 million jobs last year and economists surveyed by Bloomberg forecast unemployment will rise to a 26-year high of 8.4% by the end of 2009. Economists surveyed by Bloomberg forecast the economy contracted a 5.3% annual pace in the fourth quarter of 2008, the most since 1982. The government will release its advance estimate on January 30.
Builders are scaling back as sales slump and foreclosures mount, contributing to the economic slump. US foreclosure filings jumped 81% last year to more than 2.3 million properties got a default or auction notice, or were received by lenders, according to RealtyTrac Inc. an Irvine California-based seller of default data. KB Home, the fourth-largest US homebuilder on January 9 reported a fourth-quarter loss exceeding analyst estimates and predicted more pain for the housing market this year. The housing industry continues to confront unprecedented downward pressure, Chief Executive Officer, Jeffrey Metzger said in a conference call. These conditions persist nationally with no visible signs of lessening in the near-term. Centex Corp. the second biggest US homebuilder by sales, said last week it plans to write up to $600 million in the fiscal third quarter as land values plummeted. Net sales fell 80% from a year earlier to 1,080 units, the Dallas-based company said in a preliminary earnings statement January 23. Abrupt and sweeping changes in the economy caused unprecedented homebuyer hesitancy, which severely impacted sales early in the quarter, CEO Timothy Timothy Eller said in the statement. As housing starts dropped to record lows and unemployment rose, buyers remained firmly on the sidelines early in the quarter.
