Home closings plunge in May down sharply

Sales have fallen for 11 months

The traditionally robust spring residential-selling season ended forgettably as May home closings in the Triangle plummeted 31.1 percent from a year ago.

It was the 11th consecutive month of declining existing home sales and the largest monthly drop since the national housing slump began being felt locally in late 2006.

According to Triangle Multiple Listing Service, May existing home sales fell to 2,115 in Wake, Durham, Orange and Johnston counties from 3,071 during May 2007.

March, April and May historically are best for sales as buyers line up homes in time for the coming school year. Sales usually slow in summer, and that's unlikely to change this year.

Pending sales, a measure of future closings, were down 30.3 percent in May from a year ago, the TMLS reported. The unsold inventory of homes was up 42 percent. Showings were down 12 percent. The average number of days homes stayed on the market jumped to 93 days from 77 days.

One bright spot was prices, which have continued to rise. The average home sold in May for $245,788, up 2.6 percent from a year ago, according to TMLS.

But the local market won't improve until the unsold inventory is reduced later this year -- at the earliest -- said N.C. State University economist Michael Walden. It's hard to find someone not affected by the slump.

"It will slow the entire area down," Walden said. "The unemployment rate has gone up, retail sales are rising at a lower pace, job growth is slowing -- it's a major cause of the economic situation we find ourselves in now."

With home sales valued at more than $10 billion in 2007, the housing market is the Triangle's biggest business. Besides hundreds of builders and brokers, thousands of local jobs including landscapers, material suppliers and home stagers are tied to the health of the market.

"It hurts people who need to sell their house if they take another job," as well as retirees who want to downsize or anyone who needs to tap a home's equity for other things, like paying for college, Walden said. "For people buying or selling, it's their largest financial asset, so they have a stake in what happens to its value."

Ross Rhudy, general manager of Ammons Pittman GMAC Real Estate, one of the Triangle's larger brokerages, said buyers are delaying purchases because of uncertainty with the economy and the presidential election. Transplants still can't buy here, because they can't sell their homes somewhere else.

High gas prices also are a mounting concern as potential buyers try to reduce commuting costs.

"The further out areas -- Johnston County, Franklin County, Wake Forest -- aren't selling as fast," Rhudy said. By comparison, year-to-date sales in 2008 are down only 3 percent from a year ago at his North Raleigh office.

Still, Rhudy expects the Triangle to rebound faster than some other parts of the U.S.

"Our recovery will come sooner ... because of the attractiveness of the area," Rhudy said.