Home resales in the U.S. dropped in October and prices fell by the most on record, signaling a deepening housing recession going into 2009.
Purchases of existing homes slid to an annual rate of 4.98 million, lower than forecast, a National Association of Realtors report showed in Washington. The median price fell 11.3 percent from a year earlier, the most since the group began collecting data in 1968.
Today’s figures indicate a renewed downturn in an industry that showed signs of stabilizing this year, hurt by the credit squeeze and record mortgage foreclosures. That may raise pressure on President-elect Barack Obama to aid homeowners and potential buyers as he assembles a record stimulus package.
“Home sales will continue to fall over the next few months because of tightening credit conditions,” said Sal Guatieri, senior economist in Toronto at BMO Capital Markets, which had the closest estimate for the sales level among 67 forecasts in a Bloomberg News survey. “Underlying demand appears very weak” because “many sales are coming from cheap prices on foreclosed properties,” he added.
Existing home sales were forecast to fall to an annual rate of 5 million, according to the median estimate in the Bloomberg survey.
Sales dropped 3.1 percent from the previous month and 1.6 percent from a year earlier. Resales totaled 5.65 million in 2007. The median-sales price declined to $183,300.
Today’s figures compare with the 4.86 million level reached in June, the lowest in a decade and 33 percent below the record reached in September 2005. Resales have fluctuated around a 4.96 million rate this year.
The number of previously owned unsold homes on the market at the end of October represented 10.2 months’ at the current sales pace, up from 10 months’ at the end of the prior month.