In July, existing-home sales fell nationally to their lowest level in more than a decade. Sales were down 27.2 percent from June to July, as reported on August 24 by the National Association of Realtors. It was the lowest rate for existing homes–which include houses, condos and townhouses–since 1999. For single-family homes, it was the lowest sales rate since 1995.
Over the same two-month period, existing-home sales in the Boston Metropolitan Statistical Area (MSA) plunged a whopping 39.2%, far exceeding the 27.2% reported nationally by the Realtors. The cause of the disparity was not readily apparent (although a small part–only–may be due to the Realtors’ use of seasonally adjusted numbers).
For the year, July sales were down 29.0% in the Boston area, but that was consistent with sales in the Northeast as a whole (see below).
Some fall-off in sales was expected after the initial expiration of the tax credit on June 30, but such a big, one-month drop took analysts by surprise. The U.S. drop of 27.2% was twice what many were expecting. It even led some to suggest that the tax credit may have created temporary demand of its own, rather than drawing down presumed (but non-existent) future demand. It also amplified fears about the health of the larger economy.
Such concerns may be exaggerated. As the graph, above, reveals, existing-home sales for June and July, combined, in the Boston area, remained almost unchanged from 2009 to 2010; for the latter year, they were simply skewed by the tax credit. From January through August, in fact, Boston-area home sales were running 9.4% higher this year over last — although perhaps due as much to low interest rates as to the tax credit.
In their press release, the Realtors made a similar point, predicting that, for the country as a whole, 2010 home sales will just edge out the average for the last 20 years “because of healthy activity in the first half of the year.”
The Realtors also cited modest, annual increases in home prices, despite declining sales. However, these gains may have simply reflected a boost in consumers’ buying power due to lower interest rates. In fact, many commentators say home values have been stagnant over the past year, and predict further price declines after July’s disappointing news.
The Realtors also reported that the seasonally adjusted annual sales rate of 3.83 million for the country as a whole was 25.5 percent below the level of July a year ago.
Regionally, they said existing-home sales in the Northeast dropped 29.5 percent to an annual pace of 620,000 in July, and are 30.3 percent lower than a year ago. The median price in the Northeast was $263,800, up 4.8 percent from July 2009.
- July Existing Homes Sales Plunge 27.2% (xhb) (businessinsider.com)
- U.S. Home Sales at Lowest Level in More Than a Decade (nytimes.com)
- Existing Home Sales Plunge 27.2% to Lowest Level Since 1999 (dailyfinance.com)
- Existing-Home Sales Plunged 27% in July (online.wsj.com)
- Home Sales Plunge 27 Pct. to Lowest in 15 Years (abcnews.go.com)
- Existing Homes Sales PLUNGE To 15-Year Low (huffingtonpost.com)
- Blog Post: Existing Homes Sales PLUNGE To 15-Year Low (yzerfonteinchronicles.blogspot.com)