Feb. 16, 2007
Copyright © Las Vegas Review-Journal

REAL ESTATE: Housing sales slide in 40 states

By MARTIN CRUTSINGER
THE ASSOCIATED PRESS

A construction worker frames a house at Allerton Park near Charleston Boulevard east of the Las Vegas Beltway. Sales of new homes in Las Vegas slipped 7 percent to 36,051 in 2006. Photo by K.M. Cannon.

WASHINGTON — The slump in housing deepened in the final three months of last year, with sales falling in 40 states and median home prices dropping in nearly half the metropolitan areas surveyed.

Formerly red-hot areas such as Las Vegas were among the hardest hit as the five-year housing boom cooled considerably in 2006.

While some economists said the worst may be over for housing, others predicted more price declines to come until near-record levels of unsold homes are reduced.

The National Association of Realtors said the states with the biggest declines in sales from October through December compared with the same period in 2005 were Nevada, down 36.1 percent; Florida, down 30.8 percent; Arizona, down 26.9 percent; and California, down 21.3 percent.

In all, the Realtors said sales declined in 40 states, six states showed gains and one state, Utah, had no change in activity in the final three months of last year. There was not enough information from Idaho, New Hampshire and Vermont to make a comparison.

Local housing figures bear out the Realtors group’s numbers.

In Las Vegas, sales of existing homes dropped 30 percent or more in each of the last six months of the year and finished down 28 percent for the year at 41,892, Dennis Smith of Home Builders Research reported. New homes sales slipped 7 percent to 36,051 in 2006.

The biggest story of the year regarding the resale segment has to be the large inventory of listings, Smith said. The Greater Las Vegas Association of Realtors had 17,834 single-family home listings at the end of the year, a 33 percent increase from 2005.

Nationally, sales declined by 10.1 percent in the fourth quarter from the same period a year ago. The national median price — the point where half sell for more and half sell for less — fell to $219,300, down 2.7 percent from the fourth quarter of 2005.

In all, median home prices fell in 49 percent of the 149 metropolitan areas surveyed, the largest percentage of areas showing price declines in the 27-year history of the Realtors’ price survey.

Seevnty-three metro areas had price declines from a year ago, while 71 areas had increases. Five metro areas reported no change. The median price of a resale in Las Vegas was $285,000 in December, unchanged from the previous year, Smith said.

The price drops were led by an 18 percent decline in the Sarasota-Bradenton-Venice area of Florida. The city with the biggest price gain was Atlantic City, where the median home price was up 25.9 percent in the fourth quarter.

David Lereah, chief economist for the Realtors, said he believed the report would represent the low-point in the current housing slowdown.

“When we get the figures for the spring, I expect to see a discernible improvement in both sales and prices,” he said.

Smith said the year ended on a positive note as fewer homes came on the market in December, sales picked up and inventory shrank from November.

“We think it is still too early to believe the supply of resales is changing significantly,” he said. “It does look like it has peaked and is at least going in the right direction.”

But Mark Zandi, chief economist for Moody’s Economy.com, predicted that home prices in many parts of the country would continue to be under pressure for the rest of this year as the market works through large inventories of unsold homes.

He said this process will be made more difficult with banks raising lending standards because of concerns about rising mortgage default rates.

“The price declines we are seeing are extraordinarily broad-based and just symbolize how significant a price correction we are in,” Zandi said.

Before 2006, housing enjoyed a lengthy boom with sales of both new and existing homes setting records for five straight years. But big declines in sales and construction last year turned housing from one of the economy’s stars to a major drag, which subtracted more than a percentage point from overall growth in the third and fourth quarters.

The Realtors’ survey showed that sales were down in every region in the fourth quarter while prices fell everywhere except the West.

The fourth quarter decline in prices was led by a 4.2 percent drop in the Midwest, followed by a 3.7 percent decline in the South and a 2.5 percent fall in the Northeast. Prices were up by 0.4 percent in the West.

Review-Journal writer Hubble Smith contributed to this report.