Since the expiration of the federal homebuyer tax credit in April, US home sales have steadily declined. NAR’s chief economist predicts that housing prices will not measurably change in the immediate future, despite plummeting sales in each region of the US. See the following article from HousingWire for more on this.
Home sales cratered in July falling 27.2% from the prior month to 3.83m, reaching the lowest level since the National Association of Realtors began publishing its report in 1999.
The homebuyer tax credit expired April 30 and existing home sales have declined each month since. Sales decreased in each region of the country during the month, and sales of distressed properties now account for about a third of all sales (32%).
Single-family home sales, which account for the majority of sales, fell 27.1% to 3.37m — the lowest rate since 1985.
July sales fell 25.5% from 5.14m units a year earlier. The NAR said the revised June sales rate of 5.26m was down from a previous figure of 5.37m.
Lawrence Yun, chief economist at NAR, expects the “soft sales pace likely will continue for a few additional months.”
“Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired,” Yun said. “Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September.”
Yun said the pace could recover quickly if the economy consistently add jobs, as mortgage interest rates remain low and “historically high housing affordability conditions” persist.
Last week, Freddic Mac reported the interest rate on a 30-year fixed mortgage reached another low of 4.42%. The NAR said the average rate for the conventional home loan in July fell to 4.56% from 4.74% a month earlier and is down from 5.22% reported a year ago. The national median existing-home price in July rose slightly from the year ago to $182,600, an increase of 0.7%, according to the NAR.
“Thanks to the home buyer tax credit, home values have been stable for the past 18 months despite heavy job losses,” Yun said. “Over the short term, high supply in relation to demand clearly favors buyers. However, given that home values are back in line relative to income, and from very low new-home construction, there is not likely to be any measurable change in home prices going forward.”
Total housing inventory rose 2.5% to 3.98m homes, representing more than a year’s supply. The unsold inventory pace is up from 8.9-months supply in June but nearly 13% below the record of 4.58m in July 2008, according to the NAR.
Existing home sales in the Northeast declined 29.5% in July and are 30.3% off the year-ago pace. July sales in the Midwest plummeted 35% from the prior month and are down a third from 2009. The level of sales in the South decreased 22.6% to 1.54m homes, which is nearly 20% lower than last year. In the West, existing home sales dropped by a quarter during the month to 870,000, off 23% from the year earlier.
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