WASHINGTON – Sales of existing homes fell by a larger-than-expected amount in April while the median price of a home sold during the month fell for a ninth straight month as the troubles in the subprime mortgage market acted as a further drag on housing.
The National Association of Realtors reported Friday that sales of existing homes fell by 2.6 percent last month to a seasonally adjusted annual rate of 5.99 million units. That was the slowest sales pace since June 2003.
The median price of a home fell to $220,900, an 0.8 percent fall from the midpoint selling price a year ago. It marked the ninth straight decline in the median price.
Sales were weak in all parts of the country. The Northeast experienced the biggest decline, a fall of 8.8 percent in April from the March sales pace. Sales were down 1.7 percent in the West, 1.2 percent in the Midwest and 0.7 percent in the South.
The drop in sales was accompanied by a big jump in the number of unsold homes left on the market. They climbed to a record total of 4.2 million. It would take 8.4 months to exhaust that supply of homes at the April sales pace.
Analysts are concerned that the glut of unsold homes will further depress prices in coming months.
But Lawrence Yun, senior economist for the Realtors, said that the small year-over-year price decline of less than 1 percent was still modest compared to the 50 percent rise in home prices that occurred during the five boom years that ended last year.
Yun said some of the weakness in April reflected a weather payback after sales had shown gains at the beginning of the year, reflecting warmer-than-normal winter weather.
He also blamed the rising troubles in the subprime mortgage market, the area of the market designed for borrowers with weaker credit histories. Rising mortgage foreclosures are causing banks and other lenders to tighten up on their lending standards while curtailing their more risky loan business.
"We've been anticipating slower home sales because many subprime loan products are no longer available," he said. "Fortunately, a wide availability of conventional mortgage products and the 4.5 million jobs created over the past 24 months will help stabilize the market going forward."
He said the big rise in unsold homes on the market could be an indication that sellers are testing the market in hopes of selling their homes and moving up to larger units, which he said would be a positive early sign of a rebound in housing.
But other analysts are not as optimistic, expressing concerns that housing could remain under downward pressure for the rest of this year and stage only a modest recovery in 2008.
The troubles in housing have acted to depress overall economic activity which slowed to a growth rate of just 1.3 percent in the first three months of this year, the slowest economic growth rate in four years.