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New-Home Sales fall 3.9%---raising fears

New Home Sales fall 3.9% -- raising fears

March 27th, 2007 10:10 AM

By MARTIN CRUTSINGER | AP Economics Writer
Posted March 26, 2007, 5:25 PM EDT

WASHINGTON -- Sales of new homes fell for a second consecutive month in February, dimming hopes for a rebound soon in the troubled housing market and raising fears about the health of the overall economy.

The Commerce Department reported Monday that sales of single-family homes dropped 3.9 percent last month to a seasonally adjusted annual rate of 848,000 units, the slowest pace in nearly seven years.

The decline followed a 15.8 percent plunge in January, the biggest one-month decline in 13 years.

The weakness in sales was accompanied by a drop in prices with the median price of a new home falling to $250,000 in February, down 0.3 percent from a year ago.

The report was far weaker than Wall Street had been expecting and raised concerns that rising mortgage delinquencies and foreclosures, especially in the subprime market, would further depress housing activity in the months ahead as nervous lenders tighten their standards.

The Dow Jones industrial average fell 11.94 points Monday to close at 12,469.07 as investors reacted to the disappointing home sales report.

Concerns about financial difficulties facing many lenders in the subprime market, designed for borrowers with weak credit ratings, contributed to a 416-point plunge in the Dow average on Feb. 27.

"Lending standards apparently are tightening not only in the subprime market but in other components of mortgage lending as well and this is creating tremendous uncertainties regarding the near-term outlook for home sales and housing production," said David Seiders, chief economist for the National Association of Home Builders.

Sales were down in every region of the country except the West.

In addition, the government revised sales information for the previous three months to show weaker activity than previously reported.

The number of unsold homes shot up to 546,000 units. It would take 8.1 months to eliminate that backlog of unsold homes at the February sales pace, the longest period for this measurement in 16 years.

Economists predicted further downward pressure on prices in the months ahead until the number of unsold homes is lowered to more normal levels.

Patrick Newport, senior economist at Global Insight, said he expected that housing, which has been a major factor reducing overall economic growth, will probably trim growth rates by about 1 percentage point for all of 2007.

"The housing market is weak," he said. "Our view is that housing will not turn around until next year."

By region of the country, sales were up 24.6 percent in the West, a rebound after a 25.8 percent plunge in January.

Sales fell by 26.8 percent in the Northeast and were down 20 percent in the Midwest, two areas that were hit by snowstorms last month. Sales were down 7 percent in the South.

The performance of new home sales was in contrast to a report last week that sales of existing homes rose in February. Sales of existing homes are counted at the home closing when ownership changes hands while new home sales are recorded when the contract is signed.

Since there can be a lag of one to two months between when the contract is signed and the closing, analysts said the rise in existing home sales in February reflected warmer-than-normal weather in December and January.

The back-to-back declines in the new home market served to support the forecasts of private analysts who believe the slowdown in housing has more months to run its course.

The housing bust is coming after a boom in which sales of both new and existing homes set records for five straight years.

Some analysts see the current slowdown as a correction from a period of speculative frenzy in which investors were buying second homes in hopes of reselling them quickly to make profits.

The slowdown in housing is occurring following a two-year effort by the Federal Reserve to raise interest rates as a way of slowing the economy and keeping inflation pressures from getting out of control.

Last week, the Fed bolstered spirits on Wall Street with a signal that it might consider cutting interest rates if the economic slowdown threatens to worsen.

Posted by Erika Szabo and Don Kiolbasa on March 27th, 2007 10:10 AMPost a Comment (0)

Record glut drags down housing sales in area

March 13th, 2007 7:54 PM

Jerry W. Jackson | Sentinel Staff Writer
Posted March 13, 2007

The slumping residential real-estate market in the Orlando area is still searching for a bottom.

The number of homes and condominiums sold by Orlando Regional Realtor Association members in February fell by nearly 39 percent from the same month a year ago to 1,386, according to preliminary figures released Monday by the Orlando trade group.

At the same time, listings by local Realtors grew again in February, to an all-time high of 22,055. That represented a more than 15-month supply at the recent sales pace, according to the group's estimate.

Not all the news was bad for sellers. The median price of the homes sold in February was $255,000, up 6.2 percent from the same month a year ago.

Annette Rodriguez recently bought a condominium unit in Kissimmee through Century 21 for $175,000, getting more space and a better deal than she thought she would when she began her search about three months ago.

"It's a good price. I was going for a 2-2 and got a 3-2 for that price," she said, snagging a third bedroom in addition to two bathrooms. Also, the sale price was $35,000 below the original asking price of $210,000, and the seller agreed to cover more than $5,000 in closing costs.

Realtors, trying to find bright spots in the ongoing slump, point to the unprecedented selection of homes and condos and the fact that sellers increasingly have to accept reasonable offers rather than hold out for unrealistic figures.

Glut alters strategies

Century 21 agent Christian Frazier, whose Orlando office handled the condo sale for Rodriguez, said the huge number of properties on the market gives investors more incentive to get back into the game -- but this time, it's longer-term investors easing back into the existing-home market rather than short-term speculators.

"There's room to negotiate, and they have so much leverage," Frazier said of buyers. "I'm looking for a fixer-upper myself, to hold."

Frazier said buyers with cash can offer a lot less today for a home than they had to a year ago.

But agents are struggling to make a sale, at any price, and more are leaving the field every day, said Sergio Saenz, a Kissimmee broker-agent.

"A couple of my Realtors are looking to find full-time jobs right now. They have to pay the bills," said Saenz, a former Century 21 Realtor who formed his own agency, Century Real Estate Services Inc., in Orlando last November as many agents were leaving the field.

Saenz said many people hunting for homes can't qualify for a loan because prices have outstripped income growth.

He said the word many Realtors use these days to describe the market is "frustrating."

To generate at least some revenue, Saenz has been taking on more rentals with the idea that he will eventually get to handle a sale.

"When the market comes back, we want to be the agent," Saenz said.

Sales price holds steady

Despite meager sales, the preliminary median sales price in the Realtors' core Orlando market -- mainly Orange and Seminole counties -- held relatively steady at $255,000 in February, up 2 percent from the revised January median. The average-days-on-the-market number remained high at 92 days, about the same as in January.

Orlando Realtor association President Randy Martin said the fact that growth in the local inventory of homes listed for sale has slowed is encouraging. Only 789 listings were added in February.

Conventional-mortgage rates also remained below 6 percent in February for the third straight month, averaging 5.92 percent.

But March, April and May are prime sales months, and some industry analysts have said they expect more frustrated sellers will enter the market -- if they can get an agent to handle the listing. The local Realtors' monthly numbers do not include for-sale-by-owner listings.

The condo market continues to weaken at a faster rate than single-family homes, association records show.

Local condo sales slipped 52 percent in February from a year earlier. Sales of duplexes, town homes and villas fell 42 percent.

Home sales in the broader Metro Orlando market -- Osceola and Lake in addition to Orange and Seminole counties -- fell roughly in line with the core market, down 37.2 percent from February 2006, to 1,725 properties.

But Seminole County sales year-over-year were off 42.5 percent, while Osceola saw a 46 percent slide. Orange County held up best, with a 32.8 percent decrease, followed by Lake County with a 34.9 percent decline.

Jerry W. Jackson can be reached at jwjackson@orlandosentinel.com or 407-420-5721.

Posted by Erika Szabo and Don Kiolbasa on March 13th, 2007 7:54 PMPost a Comment (0)

Record glut drags down housing sales in area

March 13th, 2007 7:52 PM

Jerry W. Jackson | Sentinel Staff Writer
Posted March 13, 2007