Washington, Aug 25 (Calcutta Tube) US home sales plunged to their lowest level in 15 years, leading economists to warn that a likely double-dip in housing prices could further slow America’s recovery from its worst downturn in decades.
Existing home sales sank 27.2 percent in July, twice as much as analysts expected, to a seasonally adjusted annual rate of 3.83 million units, the National Association of Realtors said Tuesday, the lowest level since the industry group started its tally in 1999.
Much of that drop is attributed to the end of the $8,000 homebuyer tax credit, CNN said noting the credit brought buyers out in droves, as they tried to sign home contracts before the April 30 deadline. Now, two months later, sales are 34 percent below April’s tax incentive-induced peak.
Inventory has also continued to climb, rising 2.5 percent to 3.98 million existing homes for sale. That represents a 12.5-month supply at the current sales pace, the highest since October 1982 when it stood at 13.8 months. A six-month of supply is considered normal.
The combination of weak demand and glut of homes has put downward pressure on prices. And as the recession proved, the housing market and the broader economy are closely intertwined, analysts said. When housing prices collapse, so does the overall wealth and confidence of Americans.
The NAR report showed that the median price of homes sold in July was $182,600, up 0.7 percent from a year ago. Just under a third of homes sold during the month were distressed properties.
Sales of single-family homes sank 27.1 percent in July compared to the prior month, while condominium and co-op sales tanked 28.1 percent.
The Midwest fared the worst last month, with sales dropping 35 percent to an annual pace of 800,000 units in July, that’s 33.3 percent lower than a year earlier.
Resales in the Northwest dropped 29.5 percent from the previous month to an annual pace of 620,000 units. They fell by 25 percent in the West and 22.6 percent in the South.
(Arun Kumar can be contacted at firstname.lastname@example.org)