WASHINGTON (AP) -- Sales of existing homes fell for the eighth time in the past nine months, with the backlog of unsold single-family homes rising to the highest level in more than two decades.
The National Association of Realtors said that existing home sales dropped by 1 percent to 4.89 million units, matching the all-time low set in January. These records go back to 1999.
The median price for an existing home dropped 8 percent, compared with a year ago, to $202,300. Analysts predicted further price declines given the huge backlog of unsold single-family homes, which rose in April to 10.7 months supply at the current sales pace, the highest inventory level since June 1985.
The April sales drop was slightly smaller than had been expected. The housing industry is being battered by a prolonged slump that has seen sales and prices decline and mortgage foreclosures soar, the aftermath of a five-year housing boom.
Sales were down the most in the Midwest, a drop of 6 percent, followed by a 4.4 percent decline in the Northeast. Sales were up 6.4 percent in the West, a region of the country where prices fell by the sharpest amount, and were unchanged in the South.
Even with the weak results for April, Lawrence Yun, chief economist for the Realtors, said he saw reasons for optimism for the second half of this year as more types of mortgages become available as industry and the government respond to a severe credit crunch that began last August.
"I would encourage buyers who were disappointed by poor mortgage options to take another look at the market because the lending changes are significant," he said.
However, other economists were not as optimistic about a rebound in sales, contending that the continued drop in prices was keeping potential buyers sitting on the fence, waiting for prices to fall further.
"With prices collapsing, the incentive not to buy a home is increasing by the week, and with inventory showing no sign of improvement, prices will keep falling," predicted Ian Shepherdson, chief U.S. economist at High Frequency Economics.
The severe slump in housing and the related credit crunch, which has resulted in multibillion-dollar losses at some of the nation's largest financial institutions, has depressed growth and raised worries about a recession.
However, the Bush administration believes that the 130 million economic stimulus payments being sent out currently will help keep the country out of a full-blown recession.
© 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.