Existing Home Sales Report 08-25-2008

Existing home sales, including single-family, townhomes, condos and co-ops increased 3.1% in July to an annual rate of 5.0 million units, the NAR reported today. This was the highest level of sales in five months as recent home prices declines brought buyers back into the market. Despite the increase last month, sales remain 13.2% below their year ago rate of 5.76 million. Sales rose strongly in the West and the Northeast, were up slightly in the Midwest and fell slightly in the South. Rising foreclosure rates continue to press inventories higher and prices lower across the country. The inventory of homes available for sale for all housing types rose 3.9% at the end of July to a record high 4.67 million, which represents an 11.2 month-supply at the current sales pace. House prices continue to fall with median home sale prices declining by 7.1% over the past year to $212,400 while average prices fell 8.0% to $254,000. Foreclosures and short sales, which account for more than a third of all sales, are pushing existing home sales modestly higher but are boosting inventories and weighing down prices as well. The outlook for the near term is more of the same with prices moving even lower until demand is sufficient enough to reduce inventories. Also worth noting, it may be awhile before demand returns under tighter credit and soft economic conditions.