WASHINGTON - In a sure sign of a cooling housing market, sales of existing homes fell for the fifth successive month in January in the US. According to a report released by the National Association of Realtors, sales of existing homes dipped by 2.8 percent as against the seasonally adjusted yearly rate of 6.56 million units.
This is the slowest growth data in over two years. But even with this falling rate, home prices were unchanged in January and stood at $211,000, the same value as was existent in December. The Realtors report also said that home prices were easing in the most expensive markets, where the increase in mortgage rate in the future could strongly affect the buying power.
There was a 10 percent drop in sales in the Northeast, 7.7 percent in the Midwest, while sales in the West of the country were hit by 3.5 percent. But the South saw a gain of 2.6 percent in the sales of existing homes as the rebuilding effort in the hurricane ravaged Gulf Coast saw increased buying. The Realtors said that there was a 40 percent increase in sales in New Orleans in January as compared to last year. Houston, Baton Rouge and Mobile also showed strong sales in January. Experts have been predicting a slowdown in the booming housing market in the US for quite sometime now and this became a reality once interest rates became too steep for comfort.
The 30-year fixed-rate mortgage stood at 6.15 percent in January up from 5.71 percent a year ago, according to data from Freddie Mac as quoted by the Realtors. Commenting on the January data, Realtors' chief economist David Lereah said in a statement, "In the wake of interest rates peaking in November, I expect we are in a bit of a trough that may be followed by a modest rise and then a general plateau in the level of sales activity. Existing-home sales should stay below the record levels experienced over the last two years, but they'll maintain a historically high pace." The report also said that 7.08 million existing homes were sold in 2005 as compared to 6.78 million existing homes in 2004.
