Home sales decline in 2007

The Triangle housing market has its first annual decline in five years as the slump seems to accelerate

Sales of existing homes in the Triangle fell 18.3 percent in December, and the market notched its first annual decline in five years, according to the Triangle Multiple Listing Service.

"It's probably going to get worse before it gets better," said Joel Naroff, an independent economist in Holland, Pa., and chief economist at Commerce Bank in Cherry Hill, N.J. "You're in the downward part of the cycle, and to clear the market, the first thing that has to happen is prices have to come down."

Brokers noted that the 7.8 percent decline for 2007 is matched against a record year in 2006, and that the region's housing market is relatively strong. Still, the slump seemed to be building momentum as 2007 came to a close.

Sales declines in Wake, Durham, Johnston and Orange counties accelerated in the last six months, dropping 17.3 percent, compared to the period a year before. Pending sales -- an indicator of future closings -- were down 23 percent in December, and the December inventory of 12,894 unsold homes was 25 percent higher than a year earlier.

Residential building permits in Wake County were down 25 percent in November and December, compared to a year before. And job growth, which had powered home sales, was up a tiny 0.49 percent in November compared to a year ago.

More worrisome for sellers: Prices may be faltering after years of appreciation. Average sales prices rose 1 percent in December to $237,628 for the region, according to the TMLS. And in Wake, where two-thirds of Triangle home sales are concentrated, average prices fell 2.4 percent in December to $252,168. That was the first decline since 1991, according to Market Opportunity Research Enterprises of Rocky Mount.

"The solution to high inventory will only be solved by lower prices and there being enough buyers who qualify for credit," said Bernard Helm of Market Opportunity Research.

Tom Smith, broker in charge at Prudential Carolinas Realty's Glenwood office in Raleigh, said his sales were off about 8 percent in the last half of 2007.

"We've been fortunate," he said. "For buyers and sellers trying to make a decision, we're still in a very healthy market."

But he said prices available in the peak years 2005 and 2006 might not be attainable by some sellers.

"When properties are priced right and in good condition, they sell in a relatively short time frame," Smith said. "I don't want to say every seller has to adjust their price but ... some sellers will possibly have to adjust their expectations as to the value of the property."