Non-recovery News: July Existing Home Sales Plummet

With the summer approaching an end, and August a traditionally slow month for home sales even in the best of times, the National Association of Realtors (NAR) released their figures for July existing home sales today. They were ugly, down by 27.2%, from June (which was revised downward from initial estimates), 25.5% from last July, and setting a dramatic new record low for this index that was created in 1999.

Single family home sales are at their lowest point since May 1995. The NAR suggested the silver-lining in their report was that the homes that are selling are doing so at higher prices. That's because the more expensive homes purchased by the wealthiest buyers tend to skew the average. Separately, the amount of time that houses are remaining on the market increased to 12.5 months from June's rate of 8.9 months. That's a very worrying number.

One of the more prevalent reasons cited for this plunge is that the government's tax credit for home buyers disappeared. But, while losing the additional $8000 tax break per home may certainly be a factor, the underlying problem remains the fact that most people (millionaires and billionaires excluded) can't buy new homes because:

a) They can't afford the loss they'd have to take on their current home.

b) They can't get new credit, or negotiate old credit despite low prevailing mortgage rates.

c) They don't have the job stability, or increasingly - a job at all, to consider taking on a new mortgage.

Unfortunately, there is little on the horizon to indicate this will change any time soon.