Washington — The nation's once-booming housing market slumped even further in the spring with sales declining in 28 states, led by big drops in the formerly red-hot areas of Arizona, Florida and California.
Sales of existing homes fell nationwide to a seasonally adjusted annual rate of 6.693 million units in the April-June quarter, down by 7.5 percent from the record rate of 7.193 million units in the spring of 2005, the National Association of Realtors reported Tuesday.
And in further evidence that the boom is over for housing, the National Association of Home Builders said its monthly survey of builder sentiment fell to its lowest level in more than 15 years.
The decline, which pushed the index down seven points to 32, was blamed on rising unease among home builders about record levels of unsold new and existing homes and increased cancellations of contracts for new homes. It marked the seventh consecutive drop.
"An increasing number of potential buyers are adapting a wait-and-see attitude because of uncertainty about where the housing market is headed," said David Seiders, chief economist for the home builders.
The slowdown is occurring after a lengthy boom in which sales of both new and existing homes set records for five straight years as buyers flocked into the market, lured by the lowest mortgage rates in more than four decades.
Slight drop in Kansas
In Kansas, home sales for the second quarter of 2006 were down 1.8 percent from a year earlier.
But mortgage rates have been climbing for most of this year, reflecting a two-year campaign by the Federal Reserve to push interest rates higher as a way of slowing the economy and keeping inflation under control.
The Fed last week refrained from raising rates for an 18th time, spurring hope that the rate hikes will end before they do more damage to interest-rate sensitive sectors of the economy such as housing.
The Realtors survey showed that sales fell in 28 states and the District of Columbia in the spring, compared to the same period a year ago. By comparison, sales were down in just five states and the District of Columbia in the spring of 2005.
The biggest sales declines this spring occurred in states that had the hottest markets last year. Sales fell 26.9 percent in Arizona, 26.7 percent in Florida, 25.3 percent in California, 23.9 percent in Virginia and 23.5 percent in Nevada.
However, some other areas of the country where previous gains had been more modest continued to enjoy increases. Twenty states reported sales gains, led by Alaska, which enjoyed a 48.6 percent increase, fueled by the boom in the oil industry, followed by Arkansas, Texas and North Carolina.
"States with moderately priced areas that have experienced healthy job creation are seeing sales gains," said David Lereah, chief economist for the Realtors.
In a separate survey of price changes in 151 metropolitan areas, the Realtors reported that 26 metro areas experienced outright price declines while 37 areas were still enjoying double-digit price increases.
Mark Zandi, chief economist at Moody's Economy.com, said he looked for more widespread price declines in coming months as the housing market adjusts to fewer speculators buying up homes in hopes of making quick profits.
He said while the decline in sales and slowdown in price gains so far has been orderly, there was a risk that the declines could accelerate.
"We could go from wild optimism to stark pessimism pretty quickly," he said.
"As you get deeper into a correction, you begin to wonder whether things could get worse."
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