U.s. Home Price Falls, California Sales Even More
(The slowing U.S. real estate market has been well noted over the past year as home sales have been declining at alarming rates.)
But many sellers had not raised any eyebrows about their selling value until recently.
It seemed as if it was only a matter of time that the sliding home sales would cause home prices to fall as well. The impact of the price decline is significant because of its rarity.
Jesus Sanchez’s September 25, 2006 article,” U.S. Median Home Price Suffers 1st Slip in 10 Years,” posted on latimes.com reveals some interesting facts about the August price and sales drop.
California existing homes sales in suffered its largest biggest year-over-year decline in nearly 25 years, while the U.S. median home price declined for the first time in more than a decade, according to the California Association of Realtors (CAR).
“Statewide sales of existing houses plunged 30.1% in August from the same month last year to a seasonally adjusted annual pace of 442,150 properties, according to the California Assn. of Realtors. That was steepest year-over-year decline since August 1982, when sales tumbled 30.4%.”
The California median sales price for existing homes actually rose in August, a measly 1.6 percent compared to its year-over-year price of $576,360. The median price is calculated as the point where half the homes sold for more and half sold for less.
“‘Some areas of the state already have experienced year-to-year declines for more than two months,’ said CAR chief economist Leslie Appleton-Young in a statement. ‘This is in stark contrast to the past several years when there were constant double-digit increases. The long-term trend remains to be seen.’”
“Nationwide, the median sale price for all existing houses fell to $225,000 in August, a 1.7% drop from the same month last year, according to the National Assn. of Realtors (NAR).”
This marked the first such year-over-year price decline since 1995 and is the largest decline since 1993, according to economist Steven Wood of Insight Economics.
“‘This is the price correction we've been expecting — with sales stabilizing, we should go back to positive price growth early next year,’ said the association's economist David Lereah in a statement. ‘It keeps us on track to see the third highest sales year on record, but we do expect an adjustment in home prices to last several months as we work through a buildup in the inventory of homes on the market.’”
The price decline is slightly alarming because it hasn’t happened in 10 years, but the large drop in sales should warrant more concern. Although the decrease in price should help increase sales, or lessen the sales decrease, there is no other evidence that suggests the market correction won’t last longer than just this year.
“‘The speed of the collapse has been astonishing,’ economist Ian Shepherdson of High Frequency Economics stated in a research note. ‘With inventory still rising, there is no chance of any short-term relief. Prices and volumes have a long way to fall yet.’”
