Existing home sales fall 27% nationally in July 2010, dismal but expected
The National Association of Realtors® released the existing home sales report for July 2010 and to the surprise of nobody, sales declined sharply by 27 percent.
Lawrence Yun, NAR 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.” (emphasis added) Read more from the NAR.
Not much spin from the NAR this time although I believe the outlook of a pause period through September is somewhat optimistic and I wouldn't look for any improvement between now and the first of the year. And jobs matter most and there hasn't been and likely won't be much improvement on that front in the immediate future either.
In the Charleston real estate market, the numbers are similar. There is no way to break out the existing home sales from new home construction using the sales summary from the Charleston MLS but historically, new home sales make up approximately 25 percent of all home sales in the Charleston real estate market.
In July 2010, there were 667 homes sold, down 24 percent from the 882 homes sold in July of 2009. And of course, sales were down sharply from June 2010 when the tax credit was scheduled to expire (and by the way, the little extension to close by September 30 won't amount to much difference).
I've become a little bit less a fan of median prices because any change in the composition of what is selling will affect the median price. And that is probably why the median price in Charleston rose much more than nationally, up 6.8 percent locally vs. a 0.7 increase nationally from a year ago. With fewer first time home buyers in July and more mid priced move up buyers and luxury Charleston home buyers impacting the statistics, the median was bound to increase.
But, due to the high inventory levels, there will be pricing pressure on sellers so look for prices to decline somewhat during the slower second half of this year. Buyers will definitely have the upper hand in negotiation.
And on the mortgage front, news couldn't be any better with 30 year fixed conventional mortgage rates solidly hanging around 4.25%. And with the strength in the bond market, is it out of the question to see mortgage rates starting with a number 3. Amazing!
UPDATE: Read the follow up post, Housing is not really dead, yet.