Dec US house sales fall 22% year-over-year

24 January 2008 19:21  [Source: ICIS news]

HOUSTON (ICIS news)--December existing house sales in the US fell 22.0% year-over-year, and house prices fell for 2007, a trade group said on Thursday.

More bad news for the housing industry came from Lennar, one of the nation's largest house builders. The company said that the new house market will not likely recover in 2008, and it could become worse in the first months of the year.

The housing industry is a key downstream consuming sector for chemicals and chemicals-based products such as roofing materials, adhesives, insulation, siding, paints and coatings, synthetic materials and polyvinyl chloride (PVC) pipes. Each new house contains an average of $16,000 (€11,000) worth of chemistry, according to the American Chemistry Council (ACC).

In addition, existing houses are the largest end market for architectural coatings, with 80% of the segment's sales tied to the segment.

In December, existing house sales reached an annual rate of 4.89m in December, a 2.2% drop from the 5.00m rate in November, the National Association of Realtors (NAR) said. December's rate was down 22.0% from the 6.27m pace set in during the same time a year ago.

The annual rate for a particular month represents what the total number of sales for a year would be if the relative pace for that month were maintained for 12 consecutive months, the association said.

For all of 2007, there were 5.652m existing house sales in the US, down 12.8% from 6.478m reported in 2006.

The median price of an existing house sold in 2007 was $218,900, down 1.4% from $221,900 reported in 2006, the association said.

The inventory of existing houses up for sale reached 3.91m at the end of December, down 7.4%, the association said.

December still had a 9.6-month supply of houses, according to the association. A house market is considered to be at equilibrium if it has a six-month supply.

“The fall in inventory in December is encouraging, but inventories remain elevated and buyers have a clear edge over sellers in many markets,” according to a statement issued by Lawrence Yun, the association's chief economist.

US house builder Lennar said market conditions will not likely improve in 2008. In fact, they could even decline in the beginning months of the year.

Lennar reported that fourth-quarter revenues from house sales were $2.0bn, down 51% from $4.0bn reported for the same time in 2006. Lennar's fourth quarter ended on 30 November.

Lennar reported that house sales were $9.5bn for the fiscal year, down 36% from $14.9bn reported for the same period in 2006.

($1.00 = €0.68)

By: Al Greenwood
+1 713 525 2653

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