National Trend: Unsold homes hit record high

WASHINGTON - Sales of previously owned homes edged up in March, but the backlog of unsold homes still hit a record high, raising concerns that the once-booming housing market could be in for a rougher landing than expected.

Analysts predicted that home prices will come under more pressure in coming months if sales slow more and the inventory of unsold homes keeps rising.

The number of unsold homes on the market at the end of March hit a record of 3.19 million units. At the March sales pace, it would take 5.5 months to eliminate the backlog of unsold homes, the longest period since 5.6 months in July 1998.

Some analysts expressed concern that the rising level of unsold homes would soon start putting more downward pressure on home prices.

David Lereah, the Realtors’ chief economist, said he was still looking for a gradual slowdown in housing that would result in a drop of around 6 percent in home sales this year and a slowing in price gains to around 6 percent, compared with the double-digit gains in prices in recent years.

He said the fact that home prices have shown increases in the past two months was a good sign that sales are stabilizing after the five consecutive monthly declines.

“This is additional evidence that we are experiencing a soft landing,” he said.

This year’s rise in mortgage rates is dampening sales of both existing and new homes and forcing builders to cut back on construction of new homes. Housing has been one of the standout performers in the current four-year-long economic expansion.

Source: Martin Crutsinger, The Associated Press