Sales of existing US homes fall amid credit squeeze
Wednesday, 29 August 2007
WASHINGTON, Aug 28 (AFP): Sales of existing US homes fell in July to the lowest level in nearly five years and the glut of unsold properties surged as credit tightened amid rising foreclosures, an industry survey showed yesterday.
The National Association of Realtors (NAR) said existing- home sales edged down 0.2 per cent to an annualised 5.75 million units last month. The Wall Street consensus forecast was for 5.7 million.
It was the fifth straight month of decline in the important resale home market, which represents most US single-family housing sales.
The report covers the period before the financial crisis linked to the high-risk subprime mortgage sector emerged into a markets storm.
Inventories of unsold existing homes, which includes both single-family houses and apartments, rose 5.1 per cent in July to 4.59 million units, the NAR said.
The glut of unsold existing homes on the market was at its highest level in more than 15 years, when the world's biggest economy was in recession. At the July sales pace, it would take 9.6 months to deplete the inventory.
Economists warned that home sales were almost certain to fall more sharply next month, reflecting the credit crunch that roiled global financial markets in August.
"Unfortunately, worse news lies ahead," said Nigel Gault, US economist at Global Insight.
With June sales of existing homes upwardly revised a notch to a 5.76 million unit rate, the July sales level was the weakest since November 2002 and nine per cent below a year ago.
And prices fell in July for a record 12th consecutive month on a year- on-year basis.
"Home sales probably would be rising in the absence of the mortgage liquidity issues of the past two months," said Lawrence Yun, NAR senior economist.
"Some buyers with contracts have been scrambling when loan commitments did not materialise at the last moment, while other potential buyers are simply waiting for the mortgage market to stabilise," Yun said.
The median price of existing-home sales-the price at which half the homes are sold for more and half are sold for less -- was 228,900 dollars in July. That was down 0.6 per cent from July 2006 when the median was 230,200 dollars, the highest monthly price on record.
The National Association of Realtors (NAR) said existing- home sales edged down 0.2 per cent to an annualised 5.75 million units last month. The Wall Street consensus forecast was for 5.7 million.
It was the fifth straight month of decline in the important resale home market, which represents most US single-family housing sales.
The report covers the period before the financial crisis linked to the high-risk subprime mortgage sector emerged into a markets storm.
Inventories of unsold existing homes, which includes both single-family houses and apartments, rose 5.1 per cent in July to 4.59 million units, the NAR said.
The glut of unsold existing homes on the market was at its highest level in more than 15 years, when the world's biggest economy was in recession. At the July sales pace, it would take 9.6 months to deplete the inventory.
Economists warned that home sales were almost certain to fall more sharply next month, reflecting the credit crunch that roiled global financial markets in August.
"Unfortunately, worse news lies ahead," said Nigel Gault, US economist at Global Insight.
With June sales of existing homes upwardly revised a notch to a 5.76 million unit rate, the July sales level was the weakest since November 2002 and nine per cent below a year ago.
And prices fell in July for a record 12th consecutive month on a year- on-year basis.
"Home sales probably would be rising in the absence of the mortgage liquidity issues of the past two months," said Lawrence Yun, NAR senior economist.
"Some buyers with contracts have been scrambling when loan commitments did not materialise at the last moment, while other potential buyers are simply waiting for the mortgage market to stabilise," Yun said.
The median price of existing-home sales-the price at which half the homes are sold for more and half are sold for less -- was 228,900 dollars in July. That was down 0.6 per cent from July 2006 when the median was 230,200 dollars, the highest monthly price on record.