Existing home sales up slightly in Nov.

All three Del. counties see home prices drop
Staff and wire reports
Posted Tuesday, January 1, 2008
In early December, construction was almost at a standstill at the Dennison Ridge town home development near Hockessin. News Journal file/SUCHAT PEDERSON

WASHINGTON -- Sales of previously owned homes inched up in November, but that didn't change the overall bleak picture for an ailing housing industry that has been suffering through a painful slump.

The National Association of Realtors reported Monday that sales of existing single-family homes, condominiums and town houses rose 0.4 percent in November from October, to a seasonally adjusted annual rate of 5 million units. Over the last 12 months, however, existing home sales have plunged 20 percent, underscoring the troubles in the housing sector.

Economists were calling for sales to either move up slightly or hold steady for November.

Home prices continued to sink.

The median price of a home sold last month was $210,200. That marked a 3.3 percent drop from a year ago. It was the fifth biggest annual decline on record. The median price is where half sell for more and half sell for less.

Delaware is also feeling the effects of the housing crunch.

After large run-ups in the prices of homes in Delaware during the housing bubble, all three counties in the state are expected to finish the year with deep home price discounts.

In New Castle County, the median price jumped by 63 percent, to $236,910, between 2000 and 2006, according to data from the National Association of Realtors and Moody's Economy.com. But it is expected to drop 2.9 percent, to $230,040, this year.

The popularity of beach homes propelled the median price in Sussex County to climb 77 percent, to $212,700, between 2000 and 2006. The median price will drop by 0.4 percent this year, to $211,840, predicts Economy.com.

And Kent County saw the biggest increase in the median sale price. Between 2000 and 2006, the median price jumped 113 percent to $207,560. The median price is expected to drop 0.3 percent this year to $207,000.

A joint study by economic forecaster Global Insight and financial holding company National City Corp. released last week shows Wilmington's median home price of $246,500 was 7.7 percent overvalued, putting it in the "normal" range. (The report deemed anything within plus or minus 15 percent to be "fairly valued.")

However, the "House Prices in America" report said Dover's median home price of $192,900 was considered 27.8 percent overvalued.

The quarterly report attempts to calculate what home prices should be in 330 top U.S real estate markets -- considering population density, interest rates, relative income level, and intangible factors like climate and school districts -- and compares it to what the current prices actually are.

Nationwide, the inventory of unsold homes in November was 4.27 million homes. At the current sales pace it would take 10.3 months to exhaust that overhang.

"Inventory is still high and further reduction in prices may be required in some areas to induce buyers back into the market," said the association's chief economist, Lawrence Yun.

A separate report last week showed new-home sales tumbled 9 percent in November from October to a seasonally adjusted annual sales pace of 647,000. That was the worst sales pace since April 1995.

The housing market has been suffering through a severe slump following five years of record-breaking activity from 2001 through 2005. The boom-to-bust situation has increased dangers to the economy as a whole and has been especially hard on some homeowners.