Vacant homes for sale hit a record high

Government report says 2.9% of U.S. homes up for sale were vacant in the first quarter.

Last Updated: April 28, 2008: 1:02 PM EDT

WASHINGTON (AP) -- The percentage of vacant homes for sale in the United States set a new record high in the first quarter of this year, the government said Monday.

The Census Bureau report shows that shows that 2.9% of U.S. homes -- excluding rental properties -- were vacant and up for sale, compared with 2.8% in the fourth quarter of 2007. It was the highest quarterly number in records going back to 1956.

That works out to 2.28 million properties, up from 2.18 million in the same quarter last year, according to the report.

The West had the biggest gain in vacancy rates among homeowners, rising to 7% in the January-March period from 6.5% in the fourth quarter of 2007. Vacancy rates fell in the Midwest and South, but rose in the Northeast. The national vacancy rate, including new and existing homes, has been steadily rising since mid-2005.

Global Insight economist Patrick Newport called the report "worrisome."

"The inventory problem has not gotten any better," Newport said. Although glut-fighting homebuilders have reined in construction, "they still will have to cut back more."

The Census Bureau's report also said that the U.S. homeownership rate remained at 67.8% in the first quarter, down from a peak of 69.2% at the end of 2004.

The housing market's five-year boom is quickly becoming a faint memory, as sales and home prices have fallen dramatically over the past two years in once hot sales areas such as California and Nevada.

Last week, a Commerce Department report said sales of new homes plunged in March to the slowest pace in 16 1/2 years.

Centex Corp. (CTX, Fortune 500), Pulte Homes Inc. (PHM, Fortune 500), Hovnanian Enterprises Inc. (HOV, Fortune 500) and other builders have been caught with unsold properties over the past year as mortgages became harder to get, sales slowed and the economy soured.

Builders have slashed prices, but the discounts have done little to lure buyers who are holding out, uncertain about when the price-drop will stop.

The National Association of Realtors reported last week that sales of existing homes also fell in March, dropping by 2%, with prices declining on a year-over-year basis by 7.7%.