We’ve hit another record, and not a good one.
In July, sales of existing homes plunged to the lowest levels in 15 years, despite super low mortgage rates and bargain home prices. In July, sales fell by more than 27%, marking the largest monthly drop since 1968. Of course, fears in the housing market magnified fears about the broader economy. With the inevitable double-dip, things may only get worse. The housing market is undermining the faltering economic recovery. The hardest felt range was lower to mid-priced houses. In the Midwest, homes prices between $100,000-$250,000 fell by 47%. This record comes off a strong spring, when the government-sponsored tax credits provided a much-needed boost. Slower sales means more houses being added to the inventory levels, resulting in a 12.5 month supply of homes at the current pace of sales. Also adding to the plunge is high unemployment rates, increasing foreclosures and a standoff between buyers and sellers on price. Sellers are reluctant to lower prices too far, and buyers are reluctant to purchase, fearing prices will continue to drop.