FXstreet.com (Barcelona) - The US housing market crisis does not come to an end, and continues worsening, according to December's reading which shows a larger than expected decline in sales, plus a considerable decline in prices, as the latest data by the National Association of Realtors shows.
Sales of existing homes decreased 2.2% in December from November, to a seasonally adjusted annual rate of 4.89 million units, from a 5 million annual rate posted in November, a sharper than the 1% expected decrease to a 4.98 million annual rate advanced by the experts.
On the year, existing home sales fell 22.0% from the 6.27 million-unit level posted in December 2006.
The 2007 year, however, posted was the fifth highest record of home sales in the U.S with 5,652,000, although, compared to the previous year, the annual reading is 12.8% below the 6,478,000 transactions recorded in 2006.
The U.S. inventory of unsold homes decreased to a 9.6 months supply at the current sales pace, from 10,1 month supply in November, although, according to Ian Shepherdson, Chief U.S. Economist at High Frequency Economics, Ltd, the adjusted home supply for single family homes increased on the month: Headline inventory dropped to 9.6 months from 10.1 months but the numbers are not seasonally adjusted and this year's decline was smaller than usual in the single family market. We reckon the adjusted supply of single-family homes rose to 10.0 months from 9.7 months, putting it back in line with the recent trend.
The median price of a house declined 6-0% on the year in December to $208,400, and, according to Shepherdson, it will continue decreasing: : During the boom, the trend was just over 4 months, so the inventory overhang is gigantic and so far shows no sign of reducing. This means prices will keep falling and low nominal rates will not yet tempt people back into the market.