13 WTHR - Indianapolis News |Home sales, sale prices down in May

Home sales, sale prices down in May

Rich Van Wyk/Eyewitness News

Indianapolis - The recession may be tightening its grip on the Indiana housing market. A new report says sales were down in May and homes that do sell, are selling for less.

Indiana's real estate market is apparently among the hardest hit by the recession in the country. Compared to last year, sales of existing homes in May fell nearly 20 percent. Across the nation, sales declined about six percent.

"Unemployment. It's all about unemployment," said Dr. Rachel Smith with the University of Indianapolis.

The state's unemployment rate is more than a full point higher than the national average and rising. The economy's dependence on auto and other manufacturing does not bode well for the economy.

"Until we start seeing people start to get new jobs or feel confident about the jobs they are in, we are not going to see a rebound," Dr. Smith said.

The National Association of Realtors says nationwide about one in three homes sold are in foreclosure or the result of a distressed sale. That is putting sellers at a disadvantage.

Indiana's median prices are down more than nine percent from last year. Beyond the discouraging numbers, Indiana's Association of Realtors sees the falling housing market beginning to level off.

"We tend to see the slowdown, slowing down if you will. I think we are bouncing along the bottom of the market right now," said Karl Berron.

Realtors say reasonable mortgage interest rates and an $8,000 tax credit for first time buyers are working.

"Nationally over 40 percent of sales are first time buyers. There are a lot of those people in the market locally as well," said Berron.

Buyers have only about five months left to cash in on the tax credit, which goes away in November.

Improved home sales are essential to an improving economy, since a new house often means new appliances, new furniture, home improvements and other purchases that create jobs and tax revenue.