US house prices are falling, according to the National Association of Realtors (NAR) – America’s largest trade association. Over the last few months the property market has slowed, but new research from NAR shows the first outright year-on-year drop since April 1995 and the worst price falls since 1990.
Previously owned home sales fell by 0.5% in August, the research shows – 12.6% lower than the same time last year. David Lereah, NAR’s chief economist, said home sales appear to be levelling out leaving the market moving at a more sustainable pace. ‘This is the price correction we’ve been expecting ? with sales stabilising, we should go back to positive price growth early next year,’ he said, ‘We do expect an adjustment in home prices to last several months as we work through a build up in the inventory of homes on the market.’
The national average house price is down 1.7% to $225,000 compared to $229,000 in August 2005. Meanwhile stock levels are at their highest since April 1993 with 3.92 million homes on the market.
Liam Bailey, head of Knight Frank Reseach believes the slowing US market will have no effect on British property prices. ‘The UK market is to some extent more mature and more sophisiticated than the US market,’ he said, ‘Flat or falling prices in the US will be ignored by UK purchasers.’
According to Mr Bailey, the only effect the USA’s declining market could have on the UK would be a downturn of economic growth. ‘What will impact on the UK market is if the US market downturn impacts on consumer confidence, spending and then economic performance in the States,’ he explained, ‘If this happens we could see a real impact on the UK market in terms of slower economic growth and wealth creation over here.’
Realistic prices is the key to swift sales in the US, explains NAR President Thomas M. Stevens: ‘In some areas home sellers are not making sufficient adjustments in their listing price, so their homes are staying on the market and contributing to the build up in inventory,’ he said, ‘But with a recent cut in interest rates, NAR is advising buyers to look out for good market opportunities. ‘