Dashing hopes for a more moderate fall, existing-home sales rolled downhill by 3.5 percent in July, with single-family sales hitting a seasonally adjusted 4.67-million annual rate. The ""National Association of Realtors"":http://www.realtor.org/ (NAR) ascribed the new numbers to tight underwriting practices, a crimped credit supply, and sluggish job creation.[IMAGE]
The NAR, which released an existing-home sales ""report"":http://www.realtor.org/press_room/news_releases/2011/08/july_ehs Thursday, held that single-family townhomes, condominiums, and coops dropped from a seasonally adjusted annual rate of 4.84 million units over June. The rate nonetheless hovered 21 percent atop a pace of 3.86 million units or so from July last year, which crested a wave of new sales created by the federal homebuyer tax credit, according to the report.
""Affordability conditions this year have been the most favorable on record dating back to 1970, but many buyers are being held back because banks are offering financing to only the most highly qualified borrowers, ignoring a large share of otherwise creditworthy buyers,"" Lawrence Yun, NAR's chief economist, said in a statement. ""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.""
According to the NAR, July saw existing-home sales taper off from upward revisions recorded in June, even as monthly losses in traditionally robust regions like West and South eclipsed more favorable numbers for the Midwest and Northeast.
The trade group chalked up losses to cancelled contracts, which it said rose as a result of passed-over mortgage applications and headshakes from underwriters and appraisers. Nine percent of realtors said their contracts saw delays over the past three months in part because of low appraisals, while 13 percent blamed renegotiated contracts for lower sales prices.[COLUMN_BREAK]
Meanwhile, national median existing-home prices fell to $174,000 on average for all housing units, reflecting a 4.4-percent dip from July last year. Aggregate housing inventory dropped to 3.65 million existing homes at a seasonally annual rate, sending current sales to a 9.2-month supply from 9.4 months over June.
Thirty-two percent of homes went to first-time buyers over the July season, reflecting a 31-percent increase from June and a 7-percent decline from 38 percent over June last year. Repeat buyers clipped a majority of sales, gobbling up some 50 percent of the sales market over July. Transactions over the same period rode on all-cash sales to the tune of 29 percent, with investors taking up a considerable amount of cash-only purchases.
On a regional basis, existing-home sales went up by 2.7 percent in the Northeast, while numbers for the same nudged forward by only 1 percent in the Midwest. Sales in the South fell 1.6 percent to an annual rate of 1.84 million units as those in the West dropped by some 12.6 percent to hit an annual rate of 1.04 million over July.
""For both mortgage credit and home appraisals, there's been a parallel pendulum swing from very loose standards which led to the housing boom, to unnecessarily restrictive practices as an overreaction to the housing correction,"" Ron Phipps, NAR's president and head of Warwick-based Phipps Realty, said in a statement.
""Beyond the tight credit problems, all appraisals must be done by valuators with local expertise and using reasonable comparisons,"" he added. ""[I]t doesn't make sense to consistently see so many valuations coming in below negotiated prices, often below replacement construction costs.""
Writing for ""Capital Economics"":http://www.capitaleconomics.com/, Paul Dales, a senior U.S. economist with the research firm, wrote about the existing-home sales declines by saying it ""appears that the recent economic slowdown has already put a dent in housing demand.""
Dales added that ""[s]ome of the previous declines can be attributed to the unusually bad weather that depressed sales in the spring. But there is no escaping that the recent softness is at least partly due to the renewed weakness in the wider economy and the turmoil in the equity markets.""
Coming on the heels of the existing-sales report, the Dow Jones Industrial Average fell once more, taking a 419-point nosedive late Thursday.