NEW YORK (Reuters) - Existing home sales in the United States likely fell in March amid tight lending standards and concerns by purchasers on job security but a continued decline in prices may mute the drop and even point to sales stabilizing, economists said.
Economists surveyed by Reuters expect sales of existing homes to have declined slightly to a 4.7 million annual rate in March from 4.72 million units in February.
Sales of existing and new homes have fallen sharply along with prices, while rising defaults on subprime mortgages, made to borrowers with impaired credit, have forced banks to tighten lending requirements.
“Existing home sales dipped in March following a surprising jump in February,” said Steven A. Wood, economist at Insight Economics in Danville, California. “Nevertheless, home re-sales appear to be nearing a bottom. Falling home prices and mortgage rates have lifted home affordability to record levels.”
Economists had been fearful for months that continued price declines would force U.S. consumers to cut spending and lead to the current recession, now mounting job losses are prompting a vicious cycle of even lower home prices and sales.
The silver lining in declining sales however, has seen sellers drop prices, making homes more affordable to those who are still working.
“The overall run rate of sales seems to be stabilizing,” said Credit Suisse. “One reason is housing affordability, which has exploded to the upside in much of the country.”
The National Association of Realtors will release U.S. existing-home sales data on Thursday at 10 a.m.
Polling by Bangalore Polling Unit; Editing by Neil Stempleman
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