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Existing home sales, prices drop at record pace
Updated: 2008-12-24 10:45

WASHINGTON – The pace of existing home sales plunged a record 8.6 percent in November and prices fell a record amount as layoffs and a stock market crash worsened an already grim housing market, a real estate trade group said Tuesday.

A house sits for sale in North Aurora, Illinois July 24, 2008. [Agencies] 

The median home price fell 13.2 percent on an annual basis, down for a fifth straight month to US$181,300. It was the largest drop since the current data series began in 1968 and probably the largest since the Great Depression, Lawrence Yun, the chief economist for the National Association of Realtors, told reporters.

The pace of sales fell to a 4.49-million-unit annual rate.

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Economists polled by Reuters were expecting home resales to set a 4.90-million pace. October's figure was revised downwards to 4.91 million, from 4.98 million.

"The quickly deteriorating conditions in the job market, stock market and consumer confidence in October and November have knocked down home sales to another level," Yun said.

"It is, therefore, imperative to provide incentives for homebuyers to get back into the market, Yun said.

Past experience shows when home resales slid after the 1987 and 2001 stock market crashes, they then rebounded after the third month to what had been the trend, he said.

"We hope the home sales impact from the stock market crash turns out to be short-lived, as was the case in 1987 and 2001," Yun said.

The inventory of existing homes for sales rose 0.1 percent to 4.203 million from 4.198 million in October. That translates into 11.2 months of supply, matching the record peak set in April, Yun said.

The housing malaise, which triggered a global financial crisis, has infected other sectors of the broader economy and sent unemployment rates higher.

Analysts says stability in the housing sector is key to any recovery in the US economy, which has been in a recession since late last year.