Existing-home sales dropped sharply in July to historic lows after the home buyer tax credit expired, but home prices continued to gain, the National Association of Realtors (NAR) reported Tuesday, August 24.
Sales of existing single-family houses, townhomes, condominiums, and co-ops dropped 27.2% to a seasonally adjusted annual rate of 3.83 million units from a downwardly revised 5.26 million in June, the NAR said in its July report. Compared to a year ago, sales were 25.5% below the 5.14 million-unit level of July 2009.
Sales are at the lowest level since the NAR's existing-home sales series launched in 1999. Single-family sales, which account for the bulk of transactions, are at their lowest level since May 1995.
In other unpleasant economic news on Tuesday, the International Council of Shopping Centers (ICSC) and Goldman Sachs released their weekly U.S. chain store sales index, which has shown retail sales steadily declining over the last month. For the week ending August 21, sales were down 0.4% compared to the previous week, which showed a 1.3% drop as of August 14.
The soft home sales pace likely will continue for a few additional months, according to Lawrence Yun, NAR chief economist.
"Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired," Yun said in a statement. "Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September."
Given current "rock bottom" mortgage interest rates and historically high housing affordability, the pace of a sales recovery could pick up quickly if the economy consistently adds jobs, Yun added.
