Existing home sales tumble

Sales of existing homes plunged in March by the largest amount in 18 years, reflecting in part rising troubles in the subprime mortgage market.

The Valley fared better with last month’s resales leaping 25.8 percent from February.

“The economy of Arizona has a lot to do with it,” said Paulie Parouse, general manager of Century 21 Distinguished Properties in Scottsdale.

The Valley is still experiencing tremendous job and population growth and maintaining affordable prices, Parouse said.

Still, local resales were down 25.9 percent from March 2006.

Analysts cautioned that tougher approval standards by lenders in response to the increase in mortgage delinquencies will depress sales further in coming months. They said a rebound in housing may not happen until 2008.

The National Association of Realtors reported Tuesday that sales of existing homes fell by 8.4 percent nationwide in March, the sharpest drop since a 12.6 percent plunge in January 1989.

The decline, which was three times what had been expected, pushed sales down to a seasonally adjusted annual rate of 6.12 million units, the slowest pace in nearly three years.

The drop, which followed three straight months when sales had risen, was blamed in part on bad weather in February that depressed house hunting in much of the country after a string of warmer-than-normal months had pushed sales higher.

Existing home sales are not counted until the deal is closed though contracts signed in February do not get counted until March.

Some 5,385 existing Valley homes were sold last month, up from 4,280 in February but significantly down from the 7,265 resales recorded in March 2006, according to a report by Arizona State University Polytechnic’s Realty Studies department.

“We really can’t sustain the numbers we were looking at the last couple of years,” said Jay Butler, who heads up the department.

Investors trying to offload properties is one major reason the Valley’s existing home inventory shot up recently, Butler said. Homebuyers who overextended themselves financially to get into loans have also had an impact on the market, he said.

“We’ve got a lot of adjustments that have to come along,” but the market is starting to follow a more traditional pattern, Butler said.

Analysts said the severity of the nationwide decline showed that factors other than weather played a part.

They said troubles in the subprime mortgage market, which supplied loans to borrowers with weak credit, was starting to have an impact on sales.

Potential buyers are having more trouble getting loans as lenders tighten standards.

In addition, because of a rising number of mortgage delinquencies more homes are being dumped onto an already glutted market. RealtyTrac, which follows mortgage foreclosures, reported that foreclosures surged by 47 percent in March compared to a year ago.

The Realtors’ report said that with sales falling, the amount of time it would take to exhaust the existing inventory of unsold homes at the March sales pace rose to 7.3 months, 30 percent longer than a year ago.