From Homescape

The National Association of Realtors announced last week that sales of previously owned single-family homes plunged 13 percent in 2007, the biggest drop in a quarter-century. Last month alone, home sales dipped 2.2 percent from November, to a 4.89 million annual rate.

NAR also projected existing-home sales would increase 0.9 percent this year to 5.7 million, up from a projected 5.65 million last year. The group forecast 5.91 million home sales in 2009.

The trade group’s recent findings indicate median home prices also took a dip, declining 1.8 percent to $217,800. It is the first annual decline since records began in 1968. The median price of a previously owned home was off 6 percent last month from December 2006, and sales of condominiums fell 25 percent. The steepest decline in sales last month came in the Northeast, where sales fell 4.6 percent from November. Prices in the region were down 8.9 percent from December 2006.

Lawrence Yun, NAR chief economist, said in a statement: “Home sales remain weak despite improved affordability conditions in many parts of the country, but we could get a quick boost to the market if loan limits are raised in combination with the bold cut in the Fed funds rate. … Home prices are lower, mortgage interest rates continue to decline and incomes are higher, but many potential buyers are delaying a purchase.”

While NAR expects housing prices to remain flat in 2008, other analysts warn prices may not rebound for another two years. In a speech earlier this month, the chief executive of the mortgage finance company Fannie Mae, Daniel Mudd, said: “Home prices would perhaps begin to gain modestly” in 2010. Investment Bank Merrill Lynch forecasted last Wednesday a 15 percent drop in housing prices in 2008 and a further 10 percent drop in 2009.