As economists take stock of last year’s real estate carnage, one thing appears certain: It’s been grim, and things could worsen before they improve.
According to the U.S. Department of Commerce, new-home sales dove 14.7 percent in December, falling to a seasonally adjusted annual rate of 331,000. That rate itself was down nearly 15 percent from November’s downward-revised figure of 388,000.
Sales activity hit a 26-year low in 2008. Builders sold 482,000 homes throughout the year, the poorest performance since 1982’s sales of 412,000 homes. According to a U.S. Census Bureau report, the sales pace in December was down 45 percent from a year earlier, with sales volume plunging 38 percent from the 776,00 homes sold in 2007.
Though new-home inventory shrank to a seasonally adjusted 357,000 in December, a 10 percent drop from the previous month, a slew of oncoming foreclosures continues to swamp the market.
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Prices did not escape unscathed. December’s median price for new home sales was $206,500, down 9.3 percent from the median of $227,700 a year earlier. This was the eighth consecutive quarter of falling home values in the U.S., according to Zillow.com’s Real Estate Market Reports for the fourth quarter 2008. The report, which tracks 161 metropolitan areas throughout the country, found that home values have tumbled 17.5 percent since the market peaked in 2006.
Zillow also reports that one in six homeowners were found to have negative equity. Furthermore, of the homes sold in 2008, one out of five was a foreclosure.
Foreclosures, of course, were the story of the year. According to a Feb. 5 press release from ForeclosureListings.com, there were a total of 3,108,364 foreclosure filings in 2008: an 82 percent increase from a year earlier and a 240 percent jump from 2006. There were 315,000 U.S. foreclosures in December alone.
The greatest amount of foreclosures were seen in California, Florida and Arizona—three states that saw massive amounts of growth and investor interest during the boom years. With more than 500,000 foreclosure filings in 2008, California was the hardest-hit, with Florida coming in second at more than 360,000 foreclosures. Arizona saw more than 103,000 foreclosures.
The city of Stockton, Calif., had the highest foreclosure rate amongst the country’s 100 largest metropolitan areas: More than 9 percent of its housing units saw foreclosure. Other hard-hit cities include Las Vegas and Phoenix.
The National Association of Realtors said that sales of existing homes increased 6.5 percent throughout the month of December, with a seasonally adjusted annual rate of 4.74 million units in December. However, NAR said this was a decrease of 3.5 percent from a year earlier, when there was a pace of 4.91 million units.
In a press release, NAR chief economist Lawrence Yun called for government action to assist in a real-estate recovery. "There is a pent-up demand which could be unleashed with the right stimulus," he said. "The Obama administration and Congress need to move fast to stimulate a spring sales upturn which will help to stabilize home prices and set the foundation for a sustainable economic recovery."