- MENU
- HOME
- SEARCH
- WORLD
- MAIN
- AFRICA
- ASIA
- BALKANS
- EUROPE
- LATIN AMERICA
- MIDDLE EAST
- United Kingdom
- United States
- Argentina
- Australia
- Austria
- Benelux
- Brazil
- Canada
- China
- France
- Germany
- Greece
- Hungary
- India
- Indonesia
- Ireland
- Israel
- Italy
- Japan
- Korea
- Mexico
- New Zealand
- Pakistan
- Philippines
- Poland
- Russia
- South Africa
- Spain
- Taiwan
- Turkey
- USA
- BUSINESS
- WEALTH
- STOCKS
- TECH
- HEALTH
- LIFESTYLE
- ENTERTAINMENT
- SPORTS
- RSS
- iHaveNet.com
Luke Mullins
Existing home sales fell 27 percent in July to the lowest level in the 11-year history of this data series
Home sales took a nosedive last month, suggesting that prices may soon decline and underscoring concerns about the real estate market's capacity to recover.
Existing home sales fell 27 percent in July from June to the lowest level in the 11-year history of this data series, the
Although the national median existing home price,
Economists had expected home sales to fall in July -- although not as precipitously as they did -- on account of the expiration of the federal home buyer tax credit. In an effort to jump-start the real estate market, the Obama administration offered tax incentives worth up to
Economists are particularly concerned because the post-tax-credit "hangover" has been severe despite a pair of forces that should be working to pull buyers into the market. Home prices in 20 major metro areas have fallen 29 percent from their 2006 peaks, restoring affordability to many local markets. At the same time, mortgage rates have fallen to record lows. Average rates on 30-year fixed mortgages slipped to 4.56 percent in July from 5.22 a year earlier. "The most worrying feature of the recent housing data is the absence of evidence of any underlying improvement in sales," Nigel Gault, an economist at IHS Global Insight, said in a report. "All of the action earlier this year appears to have been driven by the tax credit."
Gault, however, argues that July's existing home sales report may actually overstate the weakness in the market. "The underlying path of housing sales is not as disastrous as July's number suggests," he said. "We are now undershooting, as sales that would have happened now were pulled forward by the tax credit."
Celia Chen, senior director at Moody's Analytics, predicts that sales will improve in short order. "We expect that job growth and low mortgage interest rates will help sales pick up in the remainder of the year," Chen said in a report. "Help will also come from some faint slackening of mortgage credit conditions -- at least for prime borrowers."
But Michelle Meyer, a senior U.S. economist at