July Existing Home Sales Fall but Prices Rise

The National Association of Realtors released the monthly existing Home sales for the month of July today. According to this, the existing Home sales were distinctly lower in July compared to the sales figure for June.

In July 3.83 million existing homes changed hands, compared to 5.26 million in June. The home buyer tax credit expired and this may have played a role in the reduced number of sales. There was a $8,000 tax credit for first-time home buyers and the $6,500 tax credit for repeat home buyers, that was valid for contracts signed by April 30.

The existing home sales are monitored since 1999. The numbers from last month are the lowest figures recorded since then.

Lawrence Yun, NAR (National Association of Realtors) chief economist, said a soft sales pace likely will continue for a few additional months. “Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired. Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September,” he said. “However, given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs.

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“Even with sales pausing for a few months, annual sales are expected to reach 5 million in 2010 because of healthy activity in the first half of the year. To place in perspective, annual sales averaged 4.9 million in the past 20 years, and 4.4 million over the past 30 years,” Yun said.

Average rates for 30-year fixed mortgages are currently at 4.56% with 0.7 points, according to Freddy May.

The market seems to indicate that the worst is over: Prices stayed firm, they were actually slightly up by 0.7 percent from the national median existing-home price for all housing types for last year. That average home price was $182,600 in July 2010.