U.S. Home Resales Drop, Inventories Rise to Record as Housing Woes Persist

Source: Bloomberg News

May 23 (Bloomberg) -- Sales of previously owned homes in the U.S. fell in April and the supply of unsold properties reached a record, signaling no let-up in the housing slump.

Purchases declined 1 percent to an annual rate of 4.89 million, higher than forecast, the National Association of Realtors said today in Washington. The median price dropped 8 percent from April last year, the second-biggest drop.

``There is no indication that things are improving,'' said Christopher Low, chief economist at FTN Financial in New York, who forecast sales would drop to a 4.9 million pace. ``Inventories will stay out of balance at least until the end of 2009 and prices will keep falling.''

Defaults on subprime mortgages have prompted lenders to restrict credit, while falling property values have given buyers who are still able to get financing reason to delay purchases. The slide in home values may hurt consumer spending, which accounts for more than two-thirds of the economy.

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``We had an unrealistic run-up of prices and the faster they come back down to the real world the better,'' William Cheney, chief economist at John Hancock Financial Services in Boston, said in an interview with Bloomberg Television. ``The faster prices come down, the quicker we can get back to an equilibrium where we actually have transactions.''

Existing home sales account for about 85 percent of the U.S. housing market while new home sales make up the rest. Monthly figures on resales are compiled from contract closings and may reflect sales agreed upon weeks or months earlier.


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Until then, I figure it's all games and manipulation. Government reports say.... Are these reports from the same government that asserts there is little inflation.