Sales of previously owned U.S. homes slipped 0.8 percent in December and took their biggest tumble in 17 years for all of 2006, leaving in doubt whether the worst of a housing slump has passed, Reuters reported. The National Association of Realtors on Thursday said December sales ran at a 6.22-million-unit annual rate, lower than the 6.25 million that Wall Street analysts had forecast. Sales for 2006 were down 8.4 percent, the biggest annual drop since 14.8 percent in 1989 when the housing sector was under pressure from a crisis in the nation's savings and loan industry and before the 1990-91 recession. But the monthly report on sales of so-called existing homes -- as opposed to newly built ones -- also contained some encouraging news since inventories of unsold homes were down 7.9 percent to 3.508 million units at the end of December. In addition, the median price of homes sold in December was up to $222,000 from $217,000 in November. The median marks the mid-point, with half the houses sold at a price under $222,000 and half above it. "We are seeing some signs of stabilization, but not recovery," said economist Gary Thayer of A.G. Edwards and Sons Inc. in St. Louis. Analysts closely monitor the key housing sector because of its potential impact on consumer spending, which drives two-thirds of overall U.S. economic activity. CAUTIOUS ON RECOVERY Federal Reserve policy-makers have expressed guarded optimism that a lengthy slide in the pace of home building and sales might be coming to an end but emphasize the risks. "While much of the downshift in the housing market appears to have occurred already, some further softening in housing starts may yet lie ahead as the inventory of unsold homes is reduced to appropriate levels," Fed Governor Susan Bies told a University of Arizona audience in Tucson last week. The Fed meets on Jan. 30-31 and investors are confident it will keep rates unchanged at 5.25 percent for a fifth consecutive meeting since it halted a long rate-hike campaign last summer. Another gauge of strain in housing came in a report showing a 42 percent leap in the number of homes taken back by lenders last year as more people became unable to pay the mortgage. RealtyTrac Inc. said more than 1.2 million foreclosures filings were made -- about one for every 92 households. One difficulty in assessing the health of the housing sector, analysts warn, is that some sellers may simply withdraw unsold homes from markets until sales prospects brighten. "I don't think we've hit bottom," said Stuart Hoffman, chief economist for PNC Financial Services Group in Pittsburgh. "The bottom won't be hit until spring or summer. There's too much inventory around." Despite the drop in available homes for sale from November, the inventory of unsold existing homes is still 23.3 percent above a year earlier. Major U.S. stock indexes were down around 1 percent, partly because of the weak housing data that highlighted risks to the economic outlook. Shares of home builders tumbled after a slew of companies reported weak quarterly results and said they did not see a rebound in the housing market. The Dow Jones U.S. Home Construction Index was off nearly 3 percent in early afternoon trading. For all the volatility in housing activity, signs are that job opportunities remain relatively healthy, which should help underpin continuing if more modest economic growth this year. The Labor Department said new claims for U.S. jobless aid jumped 36,000 last week to 325,000 -- still a relatively modest number of applicants, especially when there are lingering issues with seasonal adjustments stemming from the year-end holiday season. The number of people still on benefit rolls after drawing an initial week of aid fell 39,000 to 2.48 million in the week ended Jan. 13, the latest for which figures are available. A third report from the New York-based Conference Board said help-wanted ads in U.S. newspapers rose in December. Its gauge measuring help-wanted ad volume in the United States rose to 33 in December from a revised 29 in November.
