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Home Sales Drop To Their Lowest Level In 15 Years



Ouch. Some pretty bad news on the economic front:
Existing-home sales plunged to their lowest level in 15 years in July as inventories soared, painting a grim picture for the housing market absent government support in a stubbornly sluggish economy.

Home resales dropped a record 27.2%—nearly twice as much as analysts had expected—to an annual rate of 3.83 million in July, the National Association of Realtors said Tuesday. Meanwhile, inventories rose to 12.5 months from 8.9 months in June, pressuring already depressed home prices. Inventories are at their highest level in more than a decade.

"Historically July is the peak inventory month in any given year," NAR Chief Economist Lawrence Yun said.

Economists surveyed by Dow Jones Newswires had expected existing-home sales to fall by 14.3% to an annual rate of 4.6 million.

[snip]

The steep decline in sales in July reflects both a souring in the U.S. economic recovery and the expiration of a government tax credit program that has been supporting the housing market for more than a year.

The tax credits offered certain buyers as much as $8,000 to sign a contract by April 30. Deals originally needed to close by June 30, but lawmakers pushed that deadline to Sept. 30.

Still, the tax credit's expiration drove pending-home sales down 30% in May and caused a double-digit dive in mortgage-application volumes even as interest rates hovered near their lowest levels in generations. July's existing-home sales data reflect the May plunge in pending sales, which typically become existing sales within a couple of months.

Mortgage rates remain low, but lingering troubles in the labor market continue to restrain the nation's housing recovery. That trend likely will continue for some time.
Yikes.

The good news is that things can (hopefully) only get better, right? RIGHT?!

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Photo: Molly Riley/Reuters