Existing Home Sales Are Down Nationwide- By: Paul Escobedo
The sale of existing homes fell to its lowest point in over a decade. According to the National Association of Realtors, the sale of existing homes fell 27.2% from June to July. That drops the seasonally adjusted annual sales rate to 3.83 million, which is the lowest figure recorded since the Association started keeping track in 1999.
A drop was expected following the expiration of the federal government's tax credit for homebuyers. The credit enticed buyers by offering up to an $8,000 credit on the purchase of a new home. Still, the predictions never posted numbers this low.
Economists worry that we will soon be hit by a decline in home values because of the low sales volume and increase in inventory. July has shown us an inventory on the market of unsold homes increased by 2.5% from June to July and at the current sales pace, that gives us a 12.5 month inventory. That is another record figure for the last decade.
A distressing problem is the number of bank-owned properties that are now hitting the market. According to Zelman & Associates, bank-owned listings increased 12% for the month of August when compared to July. This will most likely affect home prices soon.
Despite record low interest rates and affordable home prices, sales have continued to drop. Many analysts believe that if mortgage rates were not below 4.5% we would see much lower sales figures. Mortgage rates are hitting 50 year lows. According to Freddie Mac, mortgage rates for the week ending August 26th were at 4.36% and 3.86% respectively for a 30-year fixed-rate 15-year fixed-rate mortgage.
The median home sale price dropped 0.2% from June to July to $182,600. That figure is 0.7% higher than one year ago. However, growing inventories and low sales will likely lead to a decrease in home values over the next year.
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