Sales of existing homes fell to their lowest level on record in July even as home prices edged up, according to a report by the National Association of Realtors.
Completed transactions of existing single-family homes, townhomes, condominiums and co-ops fell 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, the report said. Sales also fell 25.5 percent compared to July 2009.
That’s the lowest rate since NAR began keeping track of total existing-home sales in 1999, the report said. Single-family home sales, which account for most transactions, fell to a seasonally adjusted annual rate of 3.37 million — their lowest level since May 1995, when the sales rate was 3.34 million.
NAR attributed the decrease in existing-home sales to the expiration of the federal homebuyer tax credits. In order to claim the credit, buyers had to be under contract by April 30. The original deadline to close the transactions was June 30; that has since been extended to Sept. 30. Existing-home sales also slid in June.
"Consumers rationally jumped into the market before the deadline for the homebuyer 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," said Lawrence Yun, NAR’s chief economist, in a statement.
"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," Yun said.
With the exceptions of some local markets, many real estate professionals around the country echoed the report’s findings.
"Sales have really been off July and August. June was great — we had a lot of folks jump off the fence because of the credits expiring, but July took a nose-dive. We went from 600 sales down to 200 in July. August is in the 350 to 400 range and we expect pretty much the same for the rest of the year, " said Jason Lopez, director of interactive business at Century 21 Award in the San Diego area.
As sales fell, the national median home price for resale homes rose slightly, up 0.7 percent year-over-year to $182,600. Distressed home sales made up 32 percent of transactions in July, up from 31 percent in July 2009. At the same time, raw unsold inventory rose 2.5 percent to 3.98 million units at the end of July. That’s a 12.5-month supply at the current sales pace, up from an 8.9-month supply in June, the report said.
A separate NAR practitioner survey found that first-time buyers accounted for 38 percent of home sales in July, down from 43 percent in June, while investors accounted for 19 percent of sales in July, up from 13 percent in June. Repeat buyers made up the rest. All-cash sales in particular increased in July, to 30 percent from 24 percent the month before.
"It’s the entry-level buyers who seem extremely cautious right now. I have a set of buyers whose attitude from the beginning has been, ‘We want something that is affordable on a single income.’ They’re very price-sensitive. They’re nervous about the economy, nervous about job security," said Cece Blase, an agent at Paragon Real Estate in San Francisco.
In Lopez’ San Diego market, there is still some first-time homebuyer activity, he said, especially for those interested in distressed properties.
"The REO properties seem to be moving pretty good. They have some good incentives — if you do financing through Fannie Mae’s HomePath financing, for example. With short sales there’s still a little bit of lag time getting things approved, so they’re sitting on the market. There are a lot of people behind on payments, looking to (complete a) short sale before (the house) goes to auction," Lopez said.
While Yun said he expected sales to pick up in the fall, expectations from some real estate professionals are mixed.
"I’m preparing my business for a slow fall and I don’t anticipate the market to rebound to 2009 levels until the first part of (2011). That doesn’t mean we’re shutting down but rather we’re redoubling our efforts to reach buyers as things are going to be more challenging for years to come." said Jonathan Osman, a broker at Keller Williams realty in Charlotte, N.C.
Micheal Daly, market manager for Redfin Real Estate in New York, said he is seeing more potential buyers coming in to tour properties, but said buyers now lack the tax credit incentive to close deals.
"Prices are basically steady. It feels like they’re scraping along a bottom, perhaps. Listing agents are doing a pretty good job at convincing sellers to reduce their asking prices, but they’re not being as negotiable when it comes to deal time, so we have kind of a standoff right now with buyers and sellers," Daly said.
There was a higher degree of successful transactions in the fall and this spring as a result of the tax credit deadline. It incentivized people to come to terms whereas right now that incentive doesn’t exist so people look around for something better for our price."
Regionally, existing-home sales in the Midwest fell the most: 33.3 percent compared to July 2009. The region’s median price fell 2.8 percent year-over-year, to $151,600.
In the Northeast, sales were down 30.3 percent year-over-year. The median price of resale homes, however, rose 4.8 percent, to $263,800.
Sales fell 23 percent year-over-year in the West while the median price rose 3.3 percent, to $224,800.
In the South, sales dropped 19.8 percent year-over-year in July. The region was also the second to see median price decrease: 3.3 percent to $156,300.
A separate report by the California Association of Realtors found that existing, single-family home sales statewide fell 20.8 percent year-over-year in July, to a seasonally annual adjusted rate of 440,370 units.
At the same time, median home prices increased, though quite a bit more than at the national level: up 10.4 percent to $314,850 compared to the same time last year. Meanwhile, the California association’s Unsold Inventory Index rose to 5.8 months compared with four months in July 2009.