US existing home sales turn south again in March

22 April 2008 19:48  [Source: ICIS news]

WASHINGTON (ICIS news)--US sales of existing homes fell 2% in March from February and the inventory of unsold homes on the market rose 1%, with both measures indicating still further declines are in store for housing, national realtors said on Tuesday.


The National Association of Realtors (NAR) said sales of existing homes in March were at a seasonally adjusted annual rate of 4.93m units, down from the February level of 5m homes and more than 19% below the sales level seen in March 2007.


The March decline appeared to dash hopes of a housing turnaround that were fuelled by the unexpected 3% boost in existing home sales in February.


The US housing market, especially new home construction, is a major downstream consuming sector for the chemicals industry.


Although US home mortgage loan rates remain low at around 6%, they are inching upward, the association noted, and this is a likely contributor to reluctance among prospective home buyers.


NAR chief economist Lawrence Yun also suggested that amid the ongoing US credit crunch - triggered by last year’s collapse of the subprime mortgage market - many would-be home buyers are facing more restrictive loan requirements from a bankers now gun-shy about mortgage financing.


“It appears there is some over-reaction on the part of some lenders now in requiring higher down-payment percentages than may be necessary,” Yun said.


In addition, many potential home buyers may be sitting on the sidelines in anticipation of still further declines in home prices, hoping to buy more home for less if they just wait, he said.


NAR said the national median price for an existing home was $200,700 (€126,441) in March, down nearly 8% from the same month last year.


The inventory of existing homes for sale rose 1% in March compared with February to slightly more than 4m units on the market, which represents a 9.9-month supply of family housing units at the current sales pace.


In a more normal economic environment, the US would have no more than a 6-month supply of single-family homes on the market.


($1 = €0.63)

By: Joe Kamalick
+1 713 525 2653

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