The last time that home sales levels were this low was January 2004. All around the country, July home sales were way down, except in the South.Most experts feel that the downward trend will continue through the first part of 2007 because the existing homes inventory is at the highest level in 13 years. Figures indicate that nearly 4 million homes are available for sale and this is a 7.3 month inventory. This is going to push prices lower.
One of the factors that are contributing to this market weekness are the rise in interest rates, even though they are beginning to ease. Also, many investors who purchased property hoping to flip them for a quick profit are having to dump those properties as the Interest Only loans get ready to reset.David Lereah, NAR’s chief economist said, “I was disappointed. It was a lot lower than I anticipated.” “What is clear to me is sellers are more stubborn than I expected them to be. We definitely need a correction in prices in order for buyers to come back into the market.”
Nationally, he expects home prices to fall 5%.
Total existing-home sales declined 4.1% from June to a seasonally adjusted pace of 6.33 million. That’s down 11.2% from July last year. The median single-family home price, meaning half cost more and half cost less, was $231,200, up 1.5% from July last year, but the median condo price fell for the second month in a row and is now $225,600, down 1%.
The Fed voted earlier this month to hold short-term interest rates but indicated that this may be temporary if inflation continues to rise.