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The median price of U.S. home resale plunged to an unprecedented 11.3 percent to 183,300 from 2007, and is expected to continue decreasing over the next few months due to worsening credit conditions and foreclosure properties. This is the biggest decrease on a year-over-year basis since records in 1968 began. According to The National Association of Realtors, resale fell 3.1 percent in October to a yearly rate of 4.98 million units.
The Midwest has been leading falling home prices with a 6 percent drop. This is followed by a 3.2 percent fall in the South, a 1.6 percent drop in the West, and 1.2 percent decrease in the Northeast. In total, resales have plunged at a rate of 4.96 million this year. Experts predict a resale decrease to a national annual rate of 4.5 million to 5.2 million.
Meanwhile, the resale of single-family homes dropped 3.3 percent to a 4.43 million annual rate, while condominium and co-op resale decreased 1.8 percent to a rate of 550,000.
The problem has not been helped by increasing number of repossessed houses. According to foreclosure tracking firm RealTrac Inc., falling home prices have increased foreclosure filings to 25 percent last October compared to 2007.
U.S. homebuilders have also been affected greatly by increasing foreclosures. Figures show a 65 percent drop in home construction in October from a high in January 2006. Building permits have also fallen to its lowest since records began in 1960.
Stuart Miller, chief executive of the second largest U.S. construction firm, Lennar Corp. declared that foreclosures are dominating the homebuilding world and are more intense than in the past.
With the worsening housing scenario, it is unlikely that home resale will increase. Chief U.S. economist Maxwell Clarke from the New York-based IDEAglobal says that even more homes are expected to foreclose. Couple this with the already large number of homes on the market, and the possibility for improving housing market conditions seems nil.
