Home sales drop sharply
August 24, 2010,
Washington - With home buyer tax credit no longer available, month-over-month sales of existing homes dropped 27.2% in July, although home prices continued to rise.
Compared to July 2009, sales of existing single-family houses, townhomes, condos and co-ops fell 25.5%, according to the National Association of Realtors.
"Sales are at the lowest level since the total existing-home sales series launched in 1999, and single family sales - accounting for the bulk of transactions - are at the lowest level since May of 1995," according to the association.
That is likely to remain true for several months, said Lawrence Yun, NAR's chief economist.
"Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired. Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September," he said. "However, given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs.
He added: "Even with sales pausing for a few months, annual sales are expected to reach 5 million in 2010 because of healthy activity in the first half of the year. To place in perspective, annual sales averaged 4.9 million in the past 20 years, and 4.4 million over the past 30 years.".
The national median existing-home price for all housing types was $182,600 in July, up 0.7% from a year ago. Distressed home sales are unchanged from June, accounting for 32% of transactions in July. They were 31% in July 2009.