Home Sales, Prices Plummet in Fourth Quarter

Washington, DC, February 15, 2008--Sales of existing homes fell across the country during the fourth quarter, with metropolitan areas showing continuing weakness, according to the National Association of Realtors.

Nationwide, existing homes sold at an annual rate of 4.96 million units in the fourth quarter, down 21 percent from the previous year, NAR said.

Prices fell in 77 of 150 metropolitan areas, the most since the group began tracking values in 1979. The drop off was 10 percent or more in 16 metro areas.

The national median price dropped 5.8 percent, to $206,200. Every region experienced price declines. The drop was smallest in the Midwest, at 3.2 percent.

Lawrence Yun, the trade group's chief economist, attributed the price declines to mortgage-industry problems that ballooned last fall, making loans more expensive for borrowers looking to take out jumbo mortgages larger than $417,000. That's the maximum size of mortgages that government-sponsored mortgage companies Fannie Mae and Freddie Mac can buy and market as securities

"The continuing crunch in the jumbo-loan market that began in August has disproportionately reduced the number of transactions in higher-price ranges," Yun said.

Lenders made 14 percent fewer loans in 2007 than they did in 2006, according to the Mortgage Bankers Association in Washington.

As many as 15 million U.S. households could owe more on their mortgages by the end of this year than their homes are worth, according to an estimate by Goldman Sachs Group Inc.

NAR said the inventory of unsold homes was 3.91 million in December. The average number since 2000 is 2.67 million.