Sales of previously occupied homes took their largest drop in more than 40 years last month yet managed to end 2009 with the first annual gain in four years.Still, prices plunged by more than 12 percent last year — the sharpest fall since the Great Depression. The price drop for 2009 — to a median of $173,500 — showed the housing market remains too weak to help fuel a sustained economic recovery. Total sales for 2009 were nearly 5.2 million, up about 5 percent from 2008.
Last month’s worse-than-expected showing underscores concerns that the housing market could weaken further after March 31, when the Federal Reserve is set to end its program to buy mortgage securities to keep home loan rates low. Once that program ends, mortgage rates could rise. Adding to the worries, a newly extended homebuyer tax credit is scheduled to run out at the end of April.
Sales were driven to a large extent by government programs. We can expect a further drop in sales and probably prices if and when these programs expire.
It should be noted that Reno and the west was much better than the rest of the nation, experiencing a much smaller drop of about 4.8 %.