Tuesday, August 24, 2010

Existing Home Sales Plunge 27.2%; Single-Family Home Sales - Slowest Pace Since 1995

Existing home sales fell by 27.2% in July to an annualized sales pace of 3.83 million units. This sets a new cyclical low sales pace and is the slowest since the data series began in 1999. Single-family homes, which account for the bulk of the series, were at the slowest pace since 1995. July’s decline was the third consecutive monthly drop following the expiration of the homebuyer tax credit. From a year-prior, sales were down 27.5%.

With the decrease in sales over the month, the months supply of inventory rose to 12.5 from 8.9. The historical normal is around 5 months of inventory. Ratios well above this level are historically correlated with short term price declines. Until the sales pace increases and/or the supply of inventory gets further worked off, price stability is unlikely. In July however, prices were relatively stable. The median sales price declined 0.2% to $182,600, ending a four month trend of price appreciation. From a year earlier, prices were up 0.7%.

Source: National Association of Realtors

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