Home sales in the region continued their downward spiral in June, slumping by more than 15 percent as the residential real estate business declined sharply.
The year-to-year decline in Northern Kentucky was dramatic. The Northern Kentucky Association of Realtors and its multiple listing service said sales plummeted by 30 percent from June 2006 to June 2007, when 569 homes were sold.
The percentage decline was one of the most dramatic drops in recent memory.
“This is a result of the softening of the market, but at least the average prices remained fairly constant,” said Janie Wilson, president of the association.
Wilson said business is still strong although she conceded that overall sales reflect a softening of the market and a correction after five years of record-setting sales.
“When the market’s soft and there is a correction, the key is to price the home right – listen to your agent and it will sell,” she said.
Wilson, who has lived in the region for about 10 years, said she could not recall another month when sales declined by 30 percent on a year-to-year basis.
Like Wilson, Bob Hahn, president of the multiple listing service in Kentucky, said he’s having the best summer in his 10- year career.
“It’s much better than it is in other parts of the country,” Hahn said. “It’s a great time to buy.”
Nationally, the National Association of Realtors reported Wednesday that sales of existing homes and condos declined nearly 4 percent to an annual rate of 5.75 million units, the slowest sales pace in four and a half years.
But Hahn also couldn’t recall a year-to-year decline like the one reported last month.
Falling demand translated to slipping prices in Northern Kentucky, where the average sales price in June was $165,007, about $1,300 less than June of 2006.
The average number of days on market – the length of time it takes to sell a home – increased from 63 days in June of 2006 to 75 days last month.
The declines in both Kentucky and Ohio come in the wake of boom years on both sides of the Ohio. Cincinnati set six consecutive annual sales records from 2000 to 2005 while Kentucky home sales set records from 2002 to 2005.
Sales in Cincinnati declined 13.5 percent as 2,413 homes changed hands last month.
Year-to-year, the average sales price was up 1 percent to $195,183, according to the Cincinnati Area Board of Realtors.
“I think almost all of the indicators are going the right way,” said Tom Steele, president of the board.
“We’re not recovering as quickly as we had hoped, but we are recovering. I don’t know if it’s going to be the third quarter, the fourth quarter or the first quarter of next year.”
“We’re still having the fourth best year we’ve ever had (in sales),” Steele said.
He also pointed out that for the first six months of the year, sales are off 11 percent, considerably less than markets such as Las Vegas and San Diego, where sales are running 40 percent behind the first six months of 2006. At the national level, the median price of existing homes edged up slightly to $230,300 in June.
The decline in home sales was larger than had been expected and served to underscore the problems in housing, which is currently in the worst slump in 16 years.
Federal Reserve Chairman Ben Bernanke told Congress last week that he expected housing demand to stabilize and housing to be a less severe drag on growth in the coming months.
However, private economists said the existing home sales report raised serious questions about that assessment. They noted that existing home sales were falling at an annual rate of 28 percent in the second quarter, the steepest plunge so far in the downturn.
“Housing is contracting at an accelerating pace, taking out with a vengeance the brief stabilization at the turn of the year,” said Ian Shepherdson, chief economist at High Frequency Economics, a private forecasting firm.
Lawrence Yun, senior economist for the Realtors, said that potential buyers have been getting mixed signals about whether now is a good time to buy a home with mortgage rates rising and banks and other lenders tightening their standards, making it harder to qualify for a loan.
“It appears that some buyers are looking for more signs of stability before they have enough confidence to make an offer,” Yun said.
The Realtors are forecasting that sales of existing homes will fall by 5.6 percent this year with prices dropping by 1.4 percent. That would mark the first annual price decline on record.
The Associated Press contributed to this report.
