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July’s Existing Home Sales Continue to Improve, Coming in Well Above Forecast

August 21st, 2009 Michael McDonough

July’s existing home sales rose to a rate of 5.24mn, compared to the previous months rate of 4.89mn homes, and a consensus forecast of 5.00mn.  This is the biggest monthly gain since 1999.  The inventory of new homes remained unchanged at 9.4 months.  The median price for existing home was down 2.0% during the month, and 15.1% on a year over year basis.  Existing home sales have been on the rise since April, and continue to indicate a bottom in the housing sector.  This can be attributed to tax incentives, attractive mortgage rates, and relatively low home prices.  But, high levels of foreclosures and mortgage delinquencies in all types of loans stemming from weakness in the labor market will prevent the sector from reaching its full potential.

Singe family home sales rose 6.5% to 4.61mn, while condo sales rose 12.5% to 630K units.  Regionally, the Northeast rose 13.4%, while prices declined 15% on a year over year basis.  Sales in the Mid-West rose 10.9%, while prices were down only 5.9% from last year.  Sales in the south rose 7.1%, while prices declined 7.1% year over year.  Sales were down in the West by1.7%, while prices declined 28.0% from last year.

Lawrence Yun, NAR chief economist, said, “The housing market has decisively turned for the better. A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales.”

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