Home sales at 4-year low in the USA

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by Kay Murchie

In Washington, condominiums and single-family homes fell by 0.3% to 5.99 million units in May 2006 – the slowest rate since summer 2003. The average house price also dropped for the 10th consecutive month.

Sales declined by 3.4% in the south and down by 0.8% in the west. However, in the northeast, sales rose by 5.8% and were up 0.7% in the mid-west.

However, the outlook is worrying, unsold homes rose by 5% in May 2006 - a level that would take nearly 9 months to clear out if it continues at this pace. Experts believe that housing is affected by mortgage rates, they have been trending higher recently albeit still below previous averages. In addition, housing problems are causing a dent in confidence resulting in people putting off decisions to purchase a home.

The current decline in housing is the worst since the 1989-1992 downturn. This is taking place following the long-lasting growth that saw sales of new and existing homes set new records for half a decade.

It is believed by experts that the average price of a home will continue to fall until builders cut back on production of new homes. It is anticipated that the average price will weaken by 1.3% this year.