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Drop in Existing-Home Sales For 2006 Is Sharpest in 24 Years

By Jeff Bater and Brian Blackstone * RealEstateJournal.com

Existing-home sales in the U.S. fell in December, capping a soft year that saw demand make its sharpest drop in 24 years.

Home resales fell to a 6.22 million annual rate, a 0.8% decrease from November's revised 6.27 million annual pace, the National Association of Realtors said Thursday. November's rate was originally estimated at 6.28 million.

Sales for all of 2006 dropped by 8.4% to 6.48 million from a record 7.08 million in 2005. The drop was the sharpest since 17.7% in 1982.

The median home price was $222,000 in December, compared with a revised $217,000 in November and an unrevised $222,000 in December 2005.

The decrease in resales interrupted back-to-back increases. Some analysts say declining prices and soft demand has discouraged some homeowners from selling.

The December resales level was below Wall Street expectations of a 6.25 million sales rate for previously owned homes.

The average 30-year mortgage rate was 6.14% last month, down from 6.24% in November, according to Freddie Mac. Inventories of homes fell 7.9% at the end of December to 3.51 million available for sale, which represented a 6.8-month supply at the current sales pace.

Jobless Claims Jump by 36,000

The number of U.S. workers filing new claims for unemployment benefits climbed in the latest week from surprisingly low levels earlier in the month, suggesting some slackening in labor markets, according to a government report. Still, claims levels appear consistent with moderate gains in monthly payrolls.

New claims for unemployment insurance jumped 36,000 to 325,000 in the week ended Jan. 20, the Labor Department said Thursday. Claims had been below the 300,000 level -- which economists consider a benchmark for very tight labor markets -- the previous two weeks.

The Jan. 13 reading was revised to 289,000 from a previously reported level of 290,000.

There were no special factors in the latest week, though claims data tend to be volatile in January following the holiday season. A Labor Department official said there was nothing in the state-level data to indicate that recent ice storms that struck the West and Midwest were a factor. The four-week average, which smooths out weekly fluctuations, rose by 1,500 to 309,250. Continuing claims for workers drawing unemployment benefits for more than a week decreased by 39,000 to 2,484,000 in the week ended Jan. 13, the latest week for which such data are available.

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-- January 26, 2007

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