Existing home sales hit 13 year low, prices to dip 5% further in 2011

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1/20/11, "Home sales hit 13-year low," "Slow recovery ahead," AP, Martin Crutsinger

"The number of people who bought previously owned homes last year fell to the lowest level in 13 years, and economists say it will be years before the housing market fully recovers.

• High unemployment and a record number of foreclosures are deterring potential buyers who fear home prices haven't reached the bottom. Job growth is expected to pick up this year, but not enough to raise home sales to healthier levels....

The National Association of Realtors reported Thursday that sales dropped 4.8 percent to 4.91 million units in 2010. That was slightly fewer than in 2008, which had been the weakest year since 1997....

Gains in mortgage rates may have spurred some fence-sitters to buy homes in December before rates moved higher, analysts noted.

• The increase was an encouraging sign after a dismal year for home sales, said Mark Zandi, chief economist at Moody's Analytics. But he cautioned against raising expectations for a rapid recovery in housing.

"The job market is still very weak, and unemployment is very high. Until we get more jobs,

• people will be reticent about buying homes," he said.

Zandi said home prices would fall another 5 percent this year. Sales of previously occupied homes would likely exceed 5 million. That's a slight improvement from last year, he said, but it will probably take until 2013 or 2014 for sales to reach a healthy level of 6 million units a year....

Still, the unemployment rate is not expected to fall much below 9 percent this year. And the housing market cannot fully recover

• until the glut of foreclosed homes is cleared.

Last year, a record 1 million homes were lost to foreclosures, and foreclosure tracker RealtyTrac Inc. predicts 1.2 million more will be lost this year.

Foreclosures or distressed sales such as short sales — when lenders let homeowners sell for less than they owe on their mortgages — are forcing home prices down in many markets. That has made it difficult for some potential buyers looking to upgrade, because they would have to accept less money to sell their current home.

• Even historically low mortgage rates have done little to boost the sales....

The median price for a home sold in December was $168,800,

• down 1 percent from a year ago."

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