Home Sales Sink Again, Outlook Darkens

At times over the last few months I have felt like a Cassandra when it comes to my view of the residential real estate market - the turbine that powers so much of the domestic economy. Sadly, my views appear to have been on point and the gloomy predictions are becoming reality based on this new CNNMoney.com story (http://money.cnn.com/2008/01/08/news/economy/home_sales/index.htm?postversion=2008010810cnn?=yes). The lower housing goes, the lower the economy will go and the wider the economic damage will spread. We can look forward to real estate related businesses cutting staff and re-entrenching as much as possible in the face of plummeting revenues. Here are some story highlights:

NEW YORK (CNNMoney.com) -- Contracts to sell existing homes fell in November and there could be darker days ahead for home values, which are expected to post their biggest decline on record this quarter as a full-year rebound in prices now isn't expected until 2009, according to an industry trade group. The Realtors also cut its existing home price estimate for the current quarter to a 5.3 percent year-over-year decline, which would mean the current period would see the steepest drop in that price measure on record.

Only a month ago the group's estimate was for only a 2.5 percent drop in prices in the first quarter. The group's forecast released Tuesday also no longer sees even a modest rebound in existing home prices this year, as it had previously forecast, and pushed back the estimate of a full-year uptick in prices to 2009.

The November reading is even worse than the 89.8 reading recorded in September 2001, the month when terrorist attacks shook buyer confidence. That reading had been the weakest month on record before the current housing downturn. An index reading of 100 represents the level of sales at the start of 2001, when the index was started.