SALES of existing homes in the United States fell more than forecast in December, capping the biggest yearly slump in more than a generation.
Purchases fell 2.2 percent to an annual rate of 4.89 million, the National Association of Realtors said yesterday in Washington. For all of last year, sales of single-family homes declined 13 percent, the most since 1982, and prices dropped for the first time in at least four decades.
Falling property values and tougher borrowing rules may lead to more foreclosures and depress housing for most of this year. The worsening real-estate recession is at the core of the economic slowdown and will probably prompt the Federal Reserve to lower interest rates again in coming months, economists said.
"The housing market is still in a severe state of imbalance," Zach Pandl, an economist at Lehman Brothers Holdings Inc in New York, said before the report. "I think the Fed is concerned now about the second-order effects of consumer spending and business investment from the housing shock."
Economists forecast sales would fall to a 4.95-million annual rate from November's previously reported five million pace, according to the median estimate of 71 economists in a Bloomberg News survey. Projections ranged from 4.75 million to 5.15 million.
A separate report yesterday showed fewer Americans filed first-time claims for unemployment benefits last week. Initial jobless claims decreased by 1,000 to 301,000, the lowest in four months, indicating companies are reluctant to fire workers until they get a better read on the economic slowdown.
The median sales price fell six percent to US$208,400 from December 2006 and was down 1.4 percent for all of 2007 from the previous year.
The median price of a single-family home dropped 1.8 percent in 2007, the first decline since records began four decades ago and probably the first since the Great Depression in the 1930s, the realtors group said.
"I do expect sales to remain soft through the first quarter and possibly the second quarter," said Lawrence Yun, the real-estate agents' group's chief economist.
The number of homes for sale at the end of December fell 7.4 percent to 3.91 million. At the current sales pace, that represented 9.6 months' supply, compared with 10.1 months in November.