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City's low home sales still beat U.S. average

New homes available last year in Lawrence went faster than the national average. Watch

The good news: Lawrence beat the nationwide average when it comes to the sales pace for new homes last year.

The bad news: That’s not saying all that much.

Buyers snapped up 110 new homes in Lawrence during 2007, down 21.4 percent from the 140 sold in town a year earlier.

But the Lawrence rate did best the nationwide decline of 26.4 percent that the U.S. Department of Commerce reported Monday — the biggest annual slide ever, passing up the 23.1 percent drop reported in 1981.

The national numbers qualified as the latest in a series of disheartening reports to hit volatile financial markets, bolstering fears that the U.S. might be heading into recession.

But here in Lawrence, the data don’t disclose as much gloom and doom as do the national numbers, said Mike McGrew, chief executive officer of McGrew Real Estate.

“It’s not precipitous,” McGrew said. “It’s certainly not good news, but it’s not horrible news. It will be a steady year in 2008. We’ll start building a foundation so we can start climbing our way out of this in late 2008, or certainly by the first half of 2009.”

The median price paid for a new home — the price at which half were lower and half were higher — in Lawrence was $287,450 last year. That was down 0.7 percent from the median price of $289,450 in 2006.

Nationwide, the median price paid for a new home was $246,900, up 0.2 percent from a year earlier and the poorest showing since prices dropped by 2.4 percent during a housing downturn in 1991.

New homes account for about 15 percent of the Lawrence market, McGrew said. His company is crunching numbers covering other aspects of the Lawrence market, for a report to be completed during the next few weeks.

National numbers show that the biggest declines among new homes came at year’s end, with December sales of new homes declining 4.7 percent. The nationwide median price last month dropped 10.4 percent compared with the median in December 2006, making it the biggest 12-month decline in 37 years.

“It looks like the floor fell out of the housing market in December,” said Mark Zandi, chief economist at Moody’s Economy.com, who considers the current slump as already on par with the deep housing downturn of the 1980s and one that still could end up being the worst in the post-World War II period.

Housing is slumping now after a five-year boom.

Nationwide, demand for both new and existing homes hit all-time highs for five straight years, ending in 2005, the peak of the boom. New-home sales fell by 18.1 percent in 2006. The sales level last month was now down by 56.5 percent from the monthly peak hit in July 2005.

The prolonged slump in housing is raising concerns that the weakness could be severe enough to push the country into a full-blown recession. In an effort to guard against that threat, the Federal Reserve cut a key interest rate last week by the largest amount in more than two decades with a further rate cut expected Wednesday when the Fed completes a two-day meeting.

— The Associated Press contributed information for this story.