February 28, 2006 — The U.S. housing market has begun to cool, new data showed on Tuesday, as the pace of home resales slowed in January and the number of homes on the market hit a high not seen since 1998. The National Association of Realtors said sales of existing U.S. homes eased 2.8 percent in January to a 6.56 million unit annual rate, the slowest pace in nearly two years and the fifth monthly decline in a row. January’s sales rate was slightly more sluggish than economists expected. Wall Street had forecast existing home sales at a 6.6 million unit pace. December sales were revised up to a 6.75 million unit annual rate. The existing home sales figure includes both single-family houses and condos. “The housing market is certainly shifting away from a record-breaking pace,” said Lawrence Yun, senior economist for the Realtors.
Housing Market Cools, Resales Slow [Reuters]
Related:
Home Builders Say Orders Declining [MarketWatch]


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  1. Depends. Many folks who bought in the 1990s or much earlier have multi-family homes that are pretty much self-sufficient, i.e., the rent roll covers the mortgage and operating expenses. As such, these owners will certainly not be in “must sell” mode, unless the rental market crashed, which it probably will not. On the other hand, those folks who took out second mortgages to build lavish triplexes, kicked out their tenants and turn 3 or 4 families into 1 or 2 family homes might later regret those decisions.

  2. The market is/was a self-fullfilling prophecy (increasing prices > refi’s + flips > business/consumer spending > jobs/raises > ability to pay mortage). Do so much as just freeze the prices and it won’t be hard for many to fall in the “must sell” position. Holding aint free.

  3. Buyers have already realigned their expectations – I just can’t imagine sellers doing it that fast, as people are greedy pigs by nature. People not looking to move won’t, but those that “need” to for whatever reason have the potential to make any price slide long and painful by hoping against hope that their ridiculous asking price will be met.

  4. Only those who are in a “must sell” position need worry about the potential “bubble burst”. If anything it will be a soft landing as both buyers and sellers realign their expectations. If prices come in by 30% so what? Simply hold on to your #1 investment, ride the market out, possibly buy more investments properties at discounted levels, look at the foreclosure and tax lien auction market, and wait for home prices to rebound again. No one is going to look back in the year 2025 and state that 2005 represented the all-time high in real estate housing prices….

  5. Folks it’s over and this is just the beginning of the end. Not that many care, but palm beach Florida yesterday saw prices go down from exisitng sales 39% the med price there went from $410,000 to $393,000. i think it has finally arrived.