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Home Sales are Sliding and Inventories are Growing

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By : Paul Escobedo    99 or more times read
Even though June's new home sales were up 23.6 percent when compared to May, they were still the runner up for the lowest new home sales month on record according to the Department of Commerce. That being said, we can easily deduce that May's new home sales figures were the lowest month on record. The Department of Commerce reported this news on Monday July, 26th. They informed us that the seasonally adjusted annual rate of new home sales increased to 300,000 units, which is up 63,000 units from the record low month of May with 267,000 units sold. These new home sale figures are at the lowest they have ever been recorded in nearly a half a century.

While new home sales increased in June, existing home sales declined. That is the second consecutive month of declines for existing home sales. The National Association of Realtors showed in their monthly report on Thursday July, 22rd, that the sale of existing homes decreased 5.1 percent from May to June. That put the seasonally adjusted annual rate of existing homes at 5.37 million units. While that shows a decrease for the month of June, those figures are still 9.8 percent above last year pace for this time of the year.

2010 saw a brief surge in the sale of new and existing homes as buyer rushed to take advantage of the federal tax credit for up to $8,000 on the purchase of a home. However, for borrowers to qualify, they had to sign a purchase contract by April 30, 2010. The expiration of this tax credit has had a detrimental effect on the sales of homes, new and used, across the nation. Overall, regionally, the only area of the country that actually saw an increase in sales for the month of June was the Northeast, where they have shown an increase of 7.9 percent when compared to May.

Home inventories are growing and are expected to keep growing. The month of June has shown us an increase of 2.5 percent of unsold homes on the market. That puts the nation's inventory at an estimated 3.99 million units, which is nearly a 9 month supply. Salt Lake new homes and Utah new homes are expected to continue to grow as banks foreclose on borrowers that fail to obtain permanent loan modifications. This growing inventory will definitely affect the median home price. Simple economics dictates that a large supply equates to less demand which means lower home prices.
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