Existing home sales down in April 2008 - owners expect real decline in the value of their homes

Existing home sales in the U.S. have slowed some more in April, declining 1.0 percent to a seasonally adjusted rate of 4.89 million units, and are down 17.5 percent from 5.93 million units in April 2007. Inventory keeps rising and is 10.5 percent higher than in March at 4.55 million existing homes available for sale, which represents an 11.2-month supply at the current sales pace, up from a 10.0-month supply in March. Surprisingly the median existing home price was up from March and down 8 percent from a year ago.

There were some positive remarks in the report. We have noticed an interesting development in the SoCal market where home sales surged 22 percent in April.

from the NAR report:
Existing-home sales slowed in April, partly because restrictive lending practices hampered home buyers. At the same time, a greater number of areas are showing sales gains from a year ago and a recent reversal in mortgage policy means the market is better positioned for a turnaround, according to the National Association of Realtors.

The unusual mix of market conditions around the country continues, but areas showing healthy price gains include Greenville, S.C., and Springfield, Mo., both with solid local economies. “On the other hand, some markets like San Diego, Calif., and Fort Myers, Fla., are experiencing rising sales after sudden double-digit drops in local home prices, so lower prices and low interest rates are starting to generate results,” Yun said.


In a related note a Reuters/University Michigan survey shows that consumer expectations about the value of their home are still unrealistic high albeit lower than a year ago. The results showed the proportion of respondents who expect their home's value to decline during the year ahead rose to 28 percent, double the 14 percent registered in a survey a year ago. Just 17 percent anticipated that the value of their homes would increase, versus 35 percent recorded a year ago. Long term expectations fell to 58 percent from 65. Over the next five years homeowners expect the average annual gains to slide to 2.5 percent from 3.9 percent last year. They also expect a real decline in the value of their homes as long-term inflation expectations reach 3.3 percent.


read also: Homesales in SoCal surged in April 2008 - up 21.9 percent on the month
http://manonthestreet64.blogspot.com/2008/05/homesales-in-socal-surged-in-april-2008.html

source: Existing-Home Sales Ease Due to Mortgage Restrictions; Some Markets Rising
NAR, WASHINGTON, May 23, 2008
http://www.realtor.org/press_room/news_releases/2008/ehs_april08_ease

source: Homeowner sentiment darkens in May: survey
By Burton Frierson, Reuters, Fri May 23, 2008 10:07am EDT
http://www.reuters.com/article/businessNews/idUSN2353637820080523?feedType=RSS&feedName=businessNews