US likely to see falling property sales for next two years
Residential property sales in the US are likely to be slow for another two years as the market struggles to recover in 2011, according to experts.
Real estate sales fell nearly 5% in November from the previous month and are now 26% lower than a year earlier, according to the most recent RE/MAX national housing report.
The real estate giant said the market ‘is struggling to find secure footing’ after the end of the homebuyer tax credit programme earlier this year.
‘While home sales usually decline in winter months, we are seeing a large than normal correction this winter due to several artificial factors like the expired tax credit,’ said Margaret Kelly, chief executive of RE/MAX.
But she is more positive on prices. ‘Despite predictions about falling home prices, they appear to be remaining stable with several markets reporting significant price increases over the last year,’ she explained.
The monthly RE/MAX survey covers 54 metropolitan areas, and none of the areas reported an increase in November sales from the year earlier. The top five markets that experienced a sales gain last month from October include Jackson in Mississippi and Billings in Montana both with a 9.2% increase, Las Vegas up 4.7%, Birmingham in Alabama up 3.8%; and Miami up 3.6%.
The report also shows that housing starts rose for the first time in a few months in November climbing 3.9% from the previous month. Although building permits for new home construction fell to the lowest point in a year and a half, according to the Commerce Department.
Starts rose to a seasonally adjusted rate of 555,000 units, up from a revised 534,000 units for October but still 5.8% lower than a year earlier. While permits for new construction, a leading indicator of future building activity, decreased to 530,000 in November, which is 4% lower than the revised October figure of 552,000 and 14.7% below the year ago estimate of 621,000.
‘The US housing sector does not appear to be participating in the recent improvement in economic activity. We suspect this will be a theme of the next couple of years,’ said Paul Dales, US economist at Capital Economics.