by Dennis “Cos” Costa
Today on Tuesday, August 24th, 2010 the housing sales report for previously owned homes came out, and the news was disappointing. July sales on this existing inventory was the lowest they have been in 15 years. With this news, the general markets have taken a turn down as these numbers are an indication of the economy’s continued weakness.
Surprisingly as the general markets turned down on the news, by mid day the Homebuilders Index (NYSE: XHB) had already retraced earlier losses, and were showing some gains from this worse than expected news. Perhaps this is a reflection of an already badly beaten market segment rather than that of a response to this news being as in any way positive.
Prices for existing homes had been on a steady, but modest trend upward since November of 2009, when the median price for a home was $169.3K compared to July which showed the median price for a home was up to $183.4K, up 8.2% for the nine month period.
Sales of existing homes reflected in this report decreased from 5,260K units in June to a modest 3,830K units in July. This 27% drop in sales also extended the existing home inventory numbers out to a total of 12.5 months for July, from June’s 8.9 months, exacerbating its affect on over supply further by putting pressure on prices. The reduced sales results in July existed for both single family homes and for condominiums proportionately during the month.
Home sales by region all were hit by the reduced sales numbers, with none of the regions reporting a positive sales result. The Midwest was hit the hardest with reduced sales of 34.2%. The South performed the best with a sales reduction being reported of 22.9%. Both the Northeast and the Western regions reported decreased sales of 28% and 25.4% respectively.
This news comes just after the temporary federal tax credit for first-time home buyers expired on April 30th, 2010. The tax credit provided up to $8,000 for qualified first-time home buyers purchasing a principal residence, and applied to sales occurring between January 1st 2009 and April 30th 2010. Existing home buyers, under certain conditions, could qualify for a tax credit of up to $6,500. Two extensions were applied to binding sales contracts that were signed by April 30th 2010, with sales being required to be completed by September 30th 2010.
This report for existing home sales comes as a preview to new home sales, due out on Wednesday, August 25th at 10:00AM ET. June’s new home sales numbers came in at 330K, as released by the U.S. Census Bureau and the Department of HUD. The June 2010 number reflected a sequential increase from May of 23.6%, but was still down from June 2009 by 16.7%.
Contact the Author: denniscosta@marketplayground.com
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