U.S. Home Sales See Biggest Drop In 18 Years

Foreclosures as well as high gas prices contributed to decrease.

Dashing hopes that the market was on the verge of a rebound, U.S. home sales plummeted by the biggest amount in 18 years, The National Association of Realtors (NAR) said on April 24.

NAR said existing home sales sank a heavy 8.4% to an annualized pace of 6.12 million units last month, well below most forecasts that had anticipated sales of 6.45 million units. The drop in sales was the largest since January 1989 and home sales are now at their lowest level since June of 2003.

NAR officials blamed the decline partly on colder weather during March saying it likely kept potential buyers cooped up indoors.

The sharp drop in sales of apartments and family homes across the country came after sales had risen for three straight months, raising hopes that the market downturn was bottoming out. The monthly report also showed that falling prices, following a long boom in the property market that ended last year, had failed to stimulate sales last month. The median sales price of a home slipped 0.3% to $217,000.

The property market downturn has been exacerbated in recent months by rising home foreclosures and other pressures on homeowners, such as high gasoline prices. The fizz has also come out home sales as speculators have exited the market.

"We also may be seeing some losses as a result of the subprime fallout," said David Lereah, NAR's chief economist, referring to mortgage loans granted to home buyers with poor credit record.

Copyright Agence France-Presse, 2007

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