Investors, Market

Existing home sales slide 2.2% in August


The sales of existing homes fell again in August after a slight gain in July according to the latest report by the National Association of Realtors.

Nationwide, last month’s home sales fell 2.2 percent from July and were 10.7 percent below August 2007.

The national median existing home price also fell in the past year from $224,400 to $203,100 – a drop of 9.5 percent.

In the south, existing home sales actually increased 0.5 percent, but were still 15.1 percent off of last year’s pace. The median home price was $176,500, which is 3.4 percent lower than August of 2007.

The NAR has been predicting a second-half turnaround in the housing market for months now, but the chances of that happening are increasingly dim as the credit squeeze roils across Wall Street. And while the pace of declines seems to be decelerating, there is still no bottom in sight.

Lawrence Yun, the NAR’s chief economist, once again blamed the lack of access to home mortgages for the dismal sales numbers: “… home sales will be constrained without a freer flow of credit into the mortgage market. The faster that happens, the sooner we’ll see a broad stabilization in home prices that in turn will help the economy recover,” he said.

Unfortunately, it was exactly that “freer flow of credit” that directly led to the housing bubble which is now having catastrophic effects on the overall economy. After the conservatorship of Fannie and Freddie, the collapses of IndyMac, AIG, and Lehman Brothers, and a projected 700-billion-dollar plan to bail out Wall Street by purchasing bad mortgage debt, the odds that lenders will return to the wild-west anything-goes mortgage lending standards of the past years lie somewhere between none and none.

On a small positive note: the inventory of unsold homes at the end of August dropped to 10.4 months from 10.9. Still, that’s a glut of homes that need to be worked through the system, and unfortunately it is highly unlikely that any bailout on Wall Street will do anything to reduce that number.


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