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U.S. 2006 home sales drop biggest in 17 years
Published in Saudi Press Agency on 25 - 01 - 2007


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.


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