ETA: Existing home sales drop in July

Existing Home Sales Drop in July to Lowest Level Since January 2004

WASHINGTON (AP) -- Sales of previously owned homes plunged in July to the lowest level in 2 1/2 years and the inventory of unsold homes climbed to a new record high, fresh signs that the housing market has lost steam.

The National Association of Realtors reported Wednesday that sales of existing homes and condominiums dropped by 4.1 percent in July from June to a seasonally adjusted annual rate of 6.33 million. That was the lowest level since January 2004.

The latest snapshot of housing activity was weaker than analysts anticipated. Economists were forecasting the pace of sales to fall to 6.55 million.

The median price of a home sold last month was $230,000. That was up just 0.9 percent from the same month last year and marked the smallest year-over-year increase since May 1995. The median price is the middle point, where half sell for more and half sell for less.

The inventory of unsold homes in July rose to a record high of 3.86 million. That represents a supply of homes still available for 7.3 percent of a month. That is the longest period to exhaust the supply of home since the spring of 1993.

By region, sales dropped by 5.4 percent in the Northeast. They fell by 5.9 percent in the Midwest and 1.2 percent in the South. Sales declined by 6.4 percent in the West.

Wednesday's report shows that the bloom is off the rose.

For five years running, home sales had hit record highs as low mortgage rates lured buyers. But the housing sector has lost steam this year as mortgage rates have gone up and would-be buyers have grown cautious amid high energy prices and a slowing economy.

Against that backdrop, the Federal Reserve earlier this month decided to halt a rate-raising campaign that had pushed interest rates steadily higher over the last two-plus years to fend off inflation.

The Fed's goal is to raise rates sufficiently to thwart inflation but not enough to hurt the economy.

One of the things that Federal Reserve Board Chairman Ben Bernanke and his colleagues are watching closely is the housing slowdown. If home prices and sales were to crash, that could spell big trouble for the overall economy. Thus far, Bernanke has said the market's slowdown has been fairly orderly and smooth.

The housing sector's transition from a red-hot market to a cool one has important implications for the overall economy.

Consumers who watched their homes rise rapidly in value over the last several years felt wealthy and more inclined to spend. They also borrowed against their homes -- treating them like ATMs -- to support their spending ways.

But with home values not going up as much now as they had in the past several years, consumers have tightened their belts. That has contributed to a slowing in overall economic activity.

Recent reports underscore the housing slowdown's impact.

Luxury home builder Toll Brothers on Tuesday reported a sharp drop in third-quarter profits. One day earlier Lowe's Cos., the nation's second-largest home-improvement chain, warned that a slowing housing market will hurt its earnings for the rest of the year.

Last week the National Association of Home Builders reported that confidence among builders sank to a 15-year low.

Message edited 8/23/2006 10:18:16 AM.

Re: When is 10am going to arrive!!

Re: When is 10am going to arrive!!

Posted by SweetestOfPeas

Posted by Meaghan729

I can't concentrate - the July exisitng home sales are coming out!!! I am such a dork!

wow! you really are a dork

Re: When is 10am going to arrive!!

yippy for the decrease!

Re: ETA: Existing home sales drop in July

Not so good for us trying to sell a co op though

Re: ETA: Existing home sales drop in July

from money.cnn.com

The group said that there was a 7.3 month supply of homes on the market, as all regions of the country outside of the South saw a year-over-year decline in median home prices.

Re: ETA: Existing home sales drop in July

YIPPYSKIPPY!

Re: ETA: Existing home sales drop in July

Posted by anjerandunder

Not so good for us trying to sell a co op though

Re: ETA: Existing home sales drop in July

Thanks for posting this...

Re: ETA: Existing home sales drop in July

Posted by Meaghan729

Posted by anjerandunder

Not so good for us trying to sell a co op though

sorry, us first time homebuyers need somethign to be happy about!!