Existing home sales drop in July, contribute to stock market fall

“Those potential buyers represent the difference between an uneven recovery and a much more robust housing market that could stimulate additional economic activity and create jobs.”

Although sales, completed transactions that include single-family, townhomes, condominiums and co-ops, are still well below what's needed to spur a housing recovery, they are up 21 percent from the 3.86 million unit pace in July 2010, when the market hit a cyclical low following the expiration of the federal homebuyer tax credit.

This year's sales pace is running behind last year's 4.91 million — the worst in 13 years. 

Mortgage rates hit record lows this week — the average rate on a 30-year fixed mortgage fell to 4.15 percent and a 15-year fixed mortgage dropped to 3.36 percent this week — the lowest level on records dating back to 1971.

The news led to further declines of the stock market, with the Dow Jones Industrial Average down 3.68 percent, Nasdaq falling 5.22 percent and S&P dropping 4.46 percent. 

The national median existing-home price for all housing types was $174,000 in July, down 4.4 percent from July 2010. 

Distressed homes — foreclosures and short sales typically sold at deep discounts — accounted for 29 percent of sales in July, compared with 30 percent in June and 32 percent in July 2010.

Total housing inventory at the end of July fell 1.7 percent to 3.65 million existing homes available for sale, which represents a 9.4-month supply at the current sales pace, up from a 9.2-month supply in June.

Cash sales accounted for 29 percent of transactions in July, unchanged from June, with investors accounting for 18 percent of purchase activity in July compared with 19 percent in June.

First-time buyers purchased 32 percent of homes in July, up from 31 percent in June and down from 38 percent in July 2010. 

Single-family home sales declined 4 percent to a seasonally adjusted annual rate of 4.12 million in July from 4.29 million in June, but are 21.5 percent above the 3.39 million level in July 2010. The median existing single-family home price was $174,800 in July, down 4.5 percent from a year ago.

Existing condominium and co-op sales were unchanged at a seasonally adjusted annual rate of 550,000 in July, and are 17.3 percent above the 469,000-unit pace one year ago. The median existing condo price was $168,400 in July, down 4 percent from July 2010.

Regionally, sales in the Northeast rose 2.7 percent and are 19.0 percent above July 2010. The median price in the Northeast was $245,600, down 6.8 percent from a year ago.

Sales in the Midwest increased 1 percent in July to a pace of 1.05 million and are 31.3 percent above a year ago. The median price in the Midwest was $146,300, down 2.9 percent from July 2010.

In the South, sales declined 1.6 percent to an annual level of 1.84 million in July and are 19.5 percent above July 2010. The median price in the South was $152,600, 2.2 percent below a year ago.

Sales in the West fell 12.6 percent to an annual pace of 1.04 million in July but are 16.9 percent above a year ago. The median price in the West was $208,300 down 7.1 percent from July 2010.