Home sales down in December, prices up
Sales of previously owned homes in the U.S. slipped 0.8% in December and for all of 2006 took their biggest tumble in 17 years, leaving in doubt whether the worst of the nationwide housing slump has passed.
The National Assn. of Realtors on Thursday said December sales ran at a 6.22-million annual rate, lower than the 6.25 million Wall Street analysts had forecast.
Sales in 2006 were 8.4% lower than the year before, the biggest annual drop since 14.8% in 1989, when the housing sector was under pressure from a crisis in the nation’s savings and loan industry and the looming 1990-91 recession.
But the monthly report also contained encouraging news, as inventories of unsold homes were down 7.9% to 3.51 million units at the end of December.
In addition, the median price of homes sold in December was up to $222,000 from $217,000 in November.
“We are seeing some signs of stabilization, but not recovery,” said economist Gary Thayer of A.G. Edwards & Sons Inc. in St. Louis. Analysts closely monitor the housing sector because of its potential effect on consumer spending, which drives two-thirds of U.S. economic activity.
Federal Reserve policymakers have expressed guarded optimism that the slide in the pace of home building and sales might be coming to an end.
The Fed will meet Tuesday and Wednesday and investors expect it to keep its key interest rate unchanged at 5.25%.
Another indicator of strain in housing came in a report showing a 42% leap in homes taken back by lenders last year as more people couldn’t pay their mortgages. RealtyTrac Inc. said more than 1.2 million foreclosures were filed -- about one for every 92 households.
Despite the drop in homes for sale from November, the inventory of unsold existing homes was still 23.3% above that of December 2005.
For all the volatility in housing, job opportunities appear relatively healthy, which should help underpin continuing, if more modest, economic growth this year.
The Labor Department said new claims for U.S. jobless aid jumped 36,000 last week to 325,000. That’s still a relatively modest number of applicants, especially amid seasonal adjustments stemming from the year-end holiday season.
