After December progress in working through the inventory of houses sitting on the market, we had a setback in January. Sales of existing homes as well as new homes were a big disappointment.
Both housing sales indicators fell to their lowest levels in years (seasonally adjusted to reflect January's slow pace compared with other months). Thousands bought up houses at bargain prices, especially in California and Nevada.
The median sales price nationwide for a house sold in January plunged 15 percent, to $170,000, from the level a year earlier. That was the lowest level since 2003, when the housing bubble was just starting to inflate. But overall, the results were weaker than what economists expected.
We need one more ingredient to move the lumber in sufficient volume to get the housing crisis behind us: even lower mortgage rates.
There has been progress. Thanks to action by the Federal Reserve in the long-term lending markets, the fixed 30-year mortgage rate plunged from 6.4 percent in October to about 5.2 percent now. But it still hasn't dipped below the magic 5 percent. Home loans of 4.5 percent could really accelerate the recovery.
In December the Fed said it would buy "large quantities" of mortgage bonds and debt issued by mortgage agencies to get rates down. It also said it "stands ready to expand its purchases" if needed. Seems like it's time.