Existing Home Sales Show Large Surprise Drop
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The high unemployment rate and tight lending standards are offsetting the U.S. government's efforts to recover the housing market, as sales of previously owned homes fell more-than-expected to the lowest level since last summer.
The National Association of Realtors reported Friday that existing home sales fell 7.2 percent in January, to a seasonally adjusted rate of 5.05 million from the revised December pace of 5.44 million. The street was looking for a rise 0.9 percent to an annual rate of 5.50 million for the first month of the year.
The winter has seen sluggish demand for home sales as the home-buyer tax credit was extended. The original deadline of November 30, of last year caused a spike in sales of homes last fall. Since then the government moved the deadline to April 30, and now the program encompasses existing homeowners who plan to move as well.
The 9.7 percent unemployment rate is weighing heavily on the minds of consumers, as big purchases are put on the back burner while jobs remain scarce.
The weakness in consumer spending is expected to slow the growth of the economy which grew by a revised 5.9 percent pace in the final three months of 2009.
Sales declined in all regions last month with an 11 percent drop in the Northeast, a seven percent decline in the Midwest and South, and a 5 percent decline in the West.
The Federal Reserve's $1.25 trillion plan to keep mortgage rates low is set to expire on March 31, and economists see the rates rising gradually over the next year to roughly 6 percent, which could put negative pressure on home prices.
On Thursday the government said that the sales of newly built homes fell to a record low in January, following an 11 percent drop.
The National Association of Realtors reported Friday that existing home sales fell 7.2 percent in January, to a seasonally adjusted rate of 5.05 million from the revised December pace of 5.44 million. The street was looking for a rise 0.9 percent to an annual rate of 5.50 million for the first month of the year.
The winter has seen sluggish demand for home sales as the home-buyer tax credit was extended. The original deadline of November 30, of last year caused a spike in sales of homes last fall. Since then the government moved the deadline to April 30, and now the program encompasses existing homeowners who plan to move as well.
The 9.7 percent unemployment rate is weighing heavily on the minds of consumers, as big purchases are put on the back burner while jobs remain scarce.
The weakness in consumer spending is expected to slow the growth of the economy which grew by a revised 5.9 percent pace in the final three months of 2009.
Sales declined in all regions last month with an 11 percent drop in the Northeast, a seven percent decline in the Midwest and South, and a 5 percent decline in the West.
The Federal Reserve's $1.25 trillion plan to keep mortgage rates low is set to expire on March 31, and economists see the rates rising gradually over the next year to roughly 6 percent, which could put negative pressure on home prices.
On Thursday the government said that the sales of newly built homes fell to a record low in January, following an 11 percent drop.
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