U.S. Economy: Home Resales in U.S. Decline, Inventories Climb (Shobana Chandra)

 May 23 (Bloomberg) -- Sales of previously owned homes in the U.S. fell in April and the supply of unsold properties reached a record, signaling no let-up in the housing slump.

Purchases declined 1 percent to an annual rate of 4.89 million, higher than forecast, the National Association of Realtors said today in Washington. The median price dropped 8 percent from April last year, the second-biggest drop.

{xtypo_quote_left} The housing and home-improvement markets remain very difficult,'' Home Depot Chief Executive Officer Frank Blake said on a May 20 conference call. There will be "more risks than opportunities through the remainder of the year. {/xtypo_quote_left} 

 ``There is no indication that things are improving,'' said Christopher Low, chief economist at FTN Financial in New York, who forecast sales would drop to a 4.9 million pace. ``Inventories will stay out of balance at least until the end of 2009 and prices will keep falling.''

Defaults on subprime mortgages have prompted lenders to restrict credit, while falling property values have given buyers who are still able to get financing reason to delay purchases. The slide in home values may hurt consumer spending, which accounts for more than two-thirds of the economy.

Treasury securities, which had risen before the report, stayed higher. Benchmark 10-year note yields fell to 3.88 percent at 10:20 a.m. in New York, from 3.92 percent late yesterday. The Standard & Poor's 500 stock index dropped 1.2 percent to 1,378.33.

Resales were forecast to fall 1.6 percent to a 4.85 million annual rate, according to the median forecast of 67 economists in a Bloomberg News survey.

Sales were down 18 percent compared with April 2007.

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