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The housing market has, in the past, helped the U.S. economy pull itself out of recessions. This time, it looks like it just won't happen quite that way. According to the National Association of Realtors, existing home sales for the month of July were at their lowest levels in more than ten years. Sales fell across the country 27.2% from June numbers.
The Realtors Association report found the seasonally adjusted annual rate of sales was 3.83 million homes in July, not only down significantly from the previous month, but also a 25.5% drop from July 2009, according to the Los Angeles Times. Why the plunge? Many reports point to the expiration of the first-time home buyers tax credit for the sudden drop in sales. July showed the third month in a row with a drop in sales since the home buyers tax credit expired in April.
"The tax credit pulled a lot of purchases forward, so people rushed to buy a home to qualify for the credit and it would have been a weak market otherwise," said Dean Baker, co-director of the Center for Economic and Policy Research in Washington.
The disappearance of the boost from the tax credit has clearly slowed existing home sales, despite the fact that prices remain low. The median sale price of a home was $182,600, up 0.7 % from a year ago, but down 0.2 % from June. Interest rates also remain low at 4.42 %.
If prices and interest rates are so low, why are buyers so slow to make a deal? A report by the Associated Press points to continuing problems in the job market; few will want to purchase a house if they aren't sure they will keep their jobs. Additionally, some buyers think prices will drop still further and are holding out until they are sure the market has hit bottom.
Although the market is weak nation-wide, some areas are re-bounding a bit better than others. The Times writes that the Midwest has been hit hardest with a 35% drop in existing home sales, sales fell 29.5% in the Northeast, with the West coming in at a 25% decline and the South doing relatively better with a 22.6% drop.
The length of time it takes to sell a house is a good indication of which major markets have shown signs of a bit stronger comeback. The AP reports in healthier markets such as San Francisco and Denver, the average wait to sell a home is only about two months. Sellers in the state of Washington appear to have the nation's best major market. Sellers there are waiting only about a month and a half.