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One holiday wish by investors -- and business executives -- should be for a U.S. economic recovery, starting with the housing sector. That's because the housing sector showed few signs of renewal in November, as the median sales price of existing homes plummeted 13.2% to $181,300 on a year-over-year basis, the National Association of Realtors announced Tuesday. In November 2007, the median price was $208,800.
By region, the median existing home price in November dropped 0.1% in the Northeast to $257,700, decreased 25.5% in the West to $242,500, dropped 10.6% in the South to $154,500, and declined 11.2% in the Midwest to $142,200.
Meanwhile, sales of existing homes sank 8.6% in November to a 4.49-million-unit annualized rate. Sales have declined 10.6% on a year-over-year basis.
Equally distressing, the number of existing homes on the market in November rose to an 11.2-month supply at the current sales rate, up from a 10.3-month supply in October. A typical healthy market has a three to five month supply.
Home prices are 'not delightful'
Economist Peter Dawson said the weather outside is frightful, and home prices are not delightful.
"It's another abysmal existing home sales report, with the worst annual decline in home prices probably since World War II, but the record keeping wasn't as good then, so it may be longer," Dawson said. "People are not willing to buy a washer-dryer right now, let alone the house to put it in."
But with home prices off record highs set two years ago, is now a good time to consider buying an existing home?
"It's still very risky. Prices are likely to continue to fall in most regions of the country through mid-2009, and the reasons are obvious enough. Unemployment is rising, there is a large, 11-month supply of existing homes, foreclosures remain high, and consumer confidence remains low," Dawson said. "So unless you have to buy a home during a move or you spot your dream house that you can't pass up, you're likely to pay a lower price for the house, if you wait."
Housing Sector Analysis: Economist Dawson added that there will be some 'niche' housing segments that may recover first: resort, seaside and vacation areas. Otherwise, the U.S. housing sector remains in deep recession and will not add a dime to GDP growth in 2009, which all the more underscores the need for fiscal stimulus and quantitative easing (monetary stimulus) to get the U.S. economy growing again.
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