You probably have heard about the precipitous drop in U.S. existing home sales for July 2010 as compared to July 2009 (down 27.2%). For a bit of perspective, please read Lawrence Yun’s (NAR Chief Economist) comments below for more clarification on the overall housing picture for 2010.
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. 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. Raw unsold inventory is still 12.9 percent below the record of 4.58 million in July 2008. Thanks to the home buyer tax credit, home values have been stable for the past 18 months despite heavy job losses. Over the short term, high supply in relation to demand clearly favors buyers. However, given that home values are back in line relative to income, and from very low new-home construction, there is not likely to be any measurable change in home prices going forward.”
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Gary Nathan, Broker
Amanda Mavis, Assisting Agent
Woodland Developments & Realty
