Saturday, January 22, 2011

Outlook is dim as sales of homes hit 13-year low

WASHINGTON - The number of people who bought previously owned homes last year fell to the lowest level in 13 years, and economists say it will be years before the housing market fully recovers.

High unemployment and a record number of foreclosures are deterring potential buyers who fear home prices haven't reached the bottom. Job growth is expected to pick up this year, but not enough to raise home sales to healthier levels.

"We built too many houses during the boom, and now after the crash, it will take us a long time to get back to normal," said David Wyss, chief economist at Standard & Poor's.

The National Association of Realtors reported Thursday that sales dropped 4.8 percent, to 4.91 million units, in 2010. That was slightly fewer than in 2008, which had been the weakest year since 1997.

The poor year for sales did end on a stronger note. Buyers snapped up homes at a seasonally adjusted annual rate of 5.28 million units in December, the best sales pace since May, and the 12.8 percent rise from November was the biggest one-month surge in 11 years.

The increase was an encouraging sign after a dismal year for home sales, said Mark Zandi, chief economist at Moody's Analytics. But he cautioned against raising expectations for a rapid recovery in housing.

"Until we get more jobs, people will be reticent about buying homes," he said.

A reason for more optimism is a decline in the number of people applying for unemployment benefits over the past four months.

Last week, applications fell to a seasonally adjusted 404,000, the Labor Department said.

Fewer than 425,000 people applying for benefits is considered a signal of modest job growth.

by Martin Crutsinger Associated Press Jan. 21, 2011 12:00 AM

Outlook is dim as sales of homes hit 13-year low

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