Existing Home Sales Continue Freefall
Sales of previously-owned U.S. homes fell to a 10-year low in June, according to data released Thursday by the National Association of Realtors. Existing-home sales -- which include single-family, townhomes, condominiums and co-ops -- fell 2.6 percent to a seasonally-adjusted annual rate of 4.86 million units in June from a pace of 4.99 million in May, and are 15.5 percent lower than the 5.75 million-unit rate recorded one year earlier. Gloomy numbers, to be sure. But there are hordes people just waiting to buy on the sidelines, realtors say. "A recent online survey of realtors shows nearly a quarter of potential home buyers are waiting on the sidelines," said NAR President Richard Gaylord. "However, timing the market can be very tricky, which is why home buyers should always have a long-term view to build wealth." (Consumers might also not want to listen to someone whose primary interest is generating commission. We're just saying.) Not surprisingly, inventory continues to pile up as sales continue to slow. The NAR reported that inventory at the end of June rose 0.2 percent to 4.49 million existing homes available for sale, or an 11.1-month supply at the current sales pace, up from a 10.8-months of supply in May. It's also the second-highest level months-of-supply recorded in more than two decades. Most economists cite inventory as the single-most critical barometer of the health and direction in housing; rising and high inventories mean continued pressure on prices. "We're nowhere near the bottom of this mess," said one senior banking executive that spoke with HW on condition of anonymity. "The realtors can talk all they want about taking a long-term view, but the simple fact is that until we see inventory start coming down, many rational would-be homebuyers are going to sit tight." Sales dropped in all regions of the country except the West, which posted a 1 percent increase, according to the NAR. Sales fell by 6.6 percent in the Northeast, 3.4 percent in the Midwest and 3.1 percent in the South. NAR chief economist Lawrence Yun sounded hopeful that a housing package being considered this week by the Senate after passing a key House of Representatives vote on Wednesday can help lure buyers back into the housing market. "About four in 10 homes are purchased by first-time buyers, which frees existing owners to trade up," NAR economist Lawrence Yun said. "With many potential first-time home buyers on the sidelines, a first-time buyer tax credit would have a significant positive impact on both housing and the economy. Combined with permanent increases to mortgage loan limits and enhancing the FHA loan program, the housing stimulus package working its way through Congress would go a long way toward helping consumers and boosting the overall economy." For more information, visit http://www.realtor.org.