Update: New homes sales also are plummeting.
The National Association of Realtors reported this week that both home sales and prices dropped in February. Reuters reported that “(t)he actual drop was greater than even the most pessimistic forecast in a Reuters survey of 53 economists.”
The weak sales were the latest evidence of the malaise in the housing sector and confirmed it would remain outside the strengthening and broadening economic recovery.
“The housing market is still very depressed and a major drag on the economy, especially household net worth,” said Chris Christopher, a senior economist at IHS Global Insight in Lexington, Massachusetts.
Economists had expected a decline of only 4 percent to a 5.15 million-unit pace.
These slides in sales and prices affect the labor market a number of ways — but the main national effect continues to be a labor force with very limited mobility. We are certainly approaching that point where housing prices return to the pre-bubble levels; but we should expect more mobility gridlock in the near future.