Wednesday, September 24, 2008
The NAR (National Association of Realtors) reported sales of existing homes fell modestly in August, however, home prices were down 9.5 percent from year ago levels, the sharpest decline since record-keeping began in 1968.
Sales of previously owned homes fell 2.2 percent last month, from an upwardly revised annual rate of 5.02 million units in July to 4.91 million in August. Sales are now down 10.7 percent from year ago levels.
Tighter credit conditions and higher interest rates have dampened sales volume with only the Midwest (+0.9 percent) and South (+0.5) posting increases from July to August while sales declined in the the Northeast (-6.6 percent) and the West (-5.3 percent).
The inventory of unsold homes remained at historically high levels, dropping slightly from 10.9 months of supply to 10.4 months, and prices will remain under pressure until this imbalance is corrected.
Overall, the median home price fell from $224,400 in August of last year to $203,100 last month paced by a decline of 23.9 percent in the West where distressed property sales are most common. Last month, the realtors' trade group reported that more than one-third of all sales nationwide involved either foreclosures or short sales.
NAR President Richard F. Gaylord, noted the following:
The difficulty in obtaining a mortgage increased over (the) past couple months, making it more challenging for creditworthy borrowers to find financing. Our hope is that overly tight lending criteria can be loosened with reasonable standards and credit so that sales activity can catch up with demand.Mr. Gaylord may be overestimating demand a bit and understating the amount that "lending criteria can be loosened". After all, that's one of the major reasons the housing market is in the condition it is in.
We urge Congress to restore access to sound mortgage credit so people have the ability to make and keep a long-term investment in the American dream of homeownership. Congress needs to take care of Main Street and not just bail out Wall Street.
As for the NAR President's characterization of home ownership, here in the latter part of the decade, this too seems to be misguided and way behind the times.
It's more like the American "nightmare" of home ownership today.
The Commerce Department reports on new home sales tomorrow where the news is expected to be just as bleak.