April 22, 2008 / 3:31 PM / in 10 years

Existing home sales fall 2 percent

WASHINGTON (Reuters) - The pace of U.S. existing home sales fell in March while inventories swelled and prices slid, a trade group said on Tuesday in a report that showed the U.S. housing market continues to struggle.

The National Association of Realtors said existing home sales fell 2.0 percent to a 4.93 million-unit annual rate. Economists were expecting the pace to fall to 4.92 million units, off from the February rate of 5.03 million.

The inventory of homes for sale swelled by 40,000 to 4.06 million homes, or a 9.9 months’ supply at the current sales pace from 9.6 months in February. Meanwhile, the median national home price declined 7.7 percent from a year ago to $200,700.

A separate government report on national home prices showed home values up about 0.6 percent in February from the prior month but down 2.4 percent from last February.

Analysts were unmoved by the data that largely met their low expectations for the listless housing market.

“It declined basically in line with what we were looking for -- we think sales still have a couple more months of declines left,” said Adam York, an analyst with Wachovia Securities in Charlotte, North Carolina. “We are not really looking for a bottom until maybe the summer.”

Three regions across the nation saw a median home price decline, according to NAR data, while the Northeast saw a gain of 4.6 percent. The West saw a 14.7 percent drop in home prices from a year ago, NAR said.

The drop in home values nationwide has pushed many borrowers toward foreclosure and upset lending standards in many markets.

Of the homes for sale, 18 percent have negative equity and so are either in foreclosure proceedings or headed for a ‘short sale’ that will see the lender write off some of the original loan amount.

“This has been a frustration of our members,” said NAR chief economist Lawrence Yun. “Lenders have been dragging their feet (in approving short sales).”

U.S. Treasury debt prices eased after the housing data showed a smaller-than-expected slide while the U.S. dollar extended gains versus the yen and U.S. stock indexes held losses on the session.

Later this week, lawmakers on a banking committee of the U.S. House of Representatives are due to draft legislation that would allow the largest government homeowner aid program to buy more troubled loans.

Expanding the Federal Housing Administration is seen by proponents as a crucial step in stabilizing prices and so put the brakes on the sliding market.

Additional reporting by Chris Reese in New York; Editing by Andrea Ricci

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