Existing Home Sales Fall Hard In July – Can Anyone Be Really Surprised?

Posted By on August 24, 2010

Existing home sales fell to their lowest level in over 15 years in July as inventories soared.   It portrays a grim picture for the housing market absent government support.

Home resales dropped a record 27.2%  or nearly twice as much as analysts had expected to an annual rate of 3.83 million in July, according to the National Association of Realtors. Inventories rose to 12.5 months from 8.9 months in June, a worst case for already depressed home prices. Inventories are at their highest level in more than a decade.  Economists  had expected existing-home sales to fall about 14.3% to an annual rate of  around 4.6 million.

This shows that the housing industry has hit more trouble, and is not leveling off.  The positive seasonality for housing is about over, and may be setting up a cliff dive as  unemployment, foreclosures and record shadow inventory are keeping consumers on the sidelines.

Mortgage rates remain at or near record lows, and are expected to stay low for some time to come but lingering troubles in the labor market will restrain the nation’s housing recovery for the foreseeable future..  

Median home prices in July rose 0.7% to $182,600, most likely the effects of seasonal adjustments and the expiring real estate tax credits.

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