Sales of U.S. previously owned homes unexpectedly fell in January as plunging prices no longer attracted buyers ahead of the Obama administration’s stimulus plans. Purchases fell 5.3 percent to an annual rate of 4.49 million, the fewest since 1997, from 4.74 million in December, the National Association of Realtors said today in Washington. The median price dropped 15 percent from a year ago, and distressed properties accounted for 45 percent of all sales. Americans may have been waiting for details of President Barack Obama’s plans aimed at stemming foreclosures and declining home vales that are at the core of the economic slump, the group said. The housing slump is likely to deepen as concern that record foreclosures will bring prices down even more and a lack of credit keep prospective buyers at bay. “Housing is still going to have a rough patch in 2009,” Rudy Narvas, a senior economist at 4Cast Inc. in New York, said before the report. “Inventories are still high so you’re going to have pressure on prices.” Economists forecast resales would rise to a 4.79 million annual rate, according to the median of 70 projections in a Bloomberg News survey. Estimates ranged from 4.5 million to 4.91 million. Sales were down 8.6 percent compared with a year earlier. The number of unsold homes on the market at the end of January represented 9.6 months’ worth at the current sales pace, up from 9.4 months at the end of December. Breakdown Resales of single-family homes decreased 4.7 percent to an annual rate of 4.05 million. Sales of condos and co-ops dropped 10 percent to a 440,000 rate. Purchases declined in three of four regions, led by a 15 percent decline in the Northeast. Sales were unchanged in the West. Home sales have been falling since 2005 and prices peaked in 2006. The S&P/Case-Shiller home-price index of 20 metropolitan cities was down 18.5 percent in December from a year earlier, a record decline, the group said yesterday. The drop in prices and declining mortgage rates have made buying a home more attractive. The National Association of Realtors affordability index reached a record high 158.8 in December. The average rate on a 30-year fixed mortgage fell to a record low 4.96 percent in the week ended Jan. 15, according to Freddie Mac. Foreclosures Prices are likely to keep falling. Home foreclosures were up 17.8 percent in January from a year earlier, according to RealtyTrac Inc., an Irvine, California-based seller of default data. A total of 274,399 properties got a default or auction notice or were seized by banks, the 10th straight month that foreclosures topped 250,000. Obama last week introduced a plan to help as many as 9 million people restructure their mortgages to avoid foreclosures. The Treasury Department last week also said it will double the amount of stock purchases of Fannie Mae and Freddie Mac to as much as $200 billion for each company. Mounting foreclosures triggered a credit crisis which in turn has deepened the U.S. recession that began in December 2007. Economists surveyed by Bloomberg this month projected the economy will continue to contract at least through the first half of this year and that unemployment will rise to a 25-year high of 8.8 percent by the end of 2009. Fed Forecasts Federal Reserve officials don’t see labor markets improving until 2011, after economic growth gains traction. Fed Chairman Ben S. Bernanke yesterday said the U.S. economy is in a “severe” contraction, and warned the recession may last into 2010 unless policy makers can stabilize the financial system. The competition from distressed sales is hurting builders. Standard Pacific Corp., based in Irvine, California, reported its ninth straight quarterly loss on Feb. 13. New home deliveries fell 47 percent, backlogs declined 50 percent and the cancellation rate was 33 percent, the company said. “We saw our sales absorption rate, our cancellation rate and general traffic levels deteriorate beyond normal seasonal changes,” Chief Executive Officer Ken Campbell said in a statement. He said he expected home prices to decline further.

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