WASHINGTON – Sales of previously occupied homes in the United States fell 27 percent in July, the weakest showing in 15 years, the National Association of Realtors said Tuesday.
It was the largest monthly drop in the four decades that records have been kept.
Potential buyers are hesitating because they think home prices still have further to fall. Potential sellers – those with the stomach to put their homes on the market at all – are reluctant to lower their prices.
“It really is a self-fulfilling prophecy,” said Aaron Zapata, a real estate agent in Brea, Calif. “If all buyers perceive that home prices are coming down, then they will stop making offers – and home prices will come down.”
While the standoff plays out, home sales are plummeting.
Sharp declines were recorded in each of the four regions the group tracks. Yet the pain is being felt unevenly from state to state and city to city. Some markets are rebounding even as others languish.
The most recent statistics from the Northwest Multiple Listing Service showed that July in the Pacific Northwest wasn’t great.
The data show year-over-year increases in regional inventory and a decline in closed sales. Some 6,467 homes and condos in Pierce County were listed for sale in July, a 6 percent increase from this time last year. And only 686 sales closed last month, compared with 903 in July 2009.
But median home prices held steady at about $219,000 for the second month in a row and were down only 3.73 percent from a year ago. The median price means half the homes sold for more money and half sold for less.
The housing market is also being hampered by the weakening economic recovery. National unemployment remains stuck at 9.5 percent, and many potential buyers worry that they might not have a job to pay the mortgage.
Prices have also fallen because foreclosures are running about 10 times higher than before the housing bust. Though the average rate for a 30-year fixed mortgage has fallen to 4.42 percent, many people can’t qualify because banks have tightened lending standards.
Nationally, the median sale price was $182,600.
More broadly, the plunge in home sales is magnifying fears that a worsening real estate market could cause consumers to pull back on spending. The overall economy would suffer.
“The housing market is undermining the already faltering wider economic recovery,” said Paul Dales, with Capital Economics. “With the increasingly inevitable double-dip in prices yet to come, things could yet get a lot worse.”
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