Despite the historically low mortgage rates staying as low as they have been in recent months, sales of existing homes continues to not only suffer but plummet to figures we haven’t seen in over 15 years.
The sales figures for last month seem to indicate that people just aren’t buying homes like they used to. There were about 3.8 million fewer home sales in July 2010 than there was in the previous month. Figures from one month to the next have never declined as sharply as that since 1968. Many are taking this drastic drop as a sign that the economy really isn’t doing much better despite what the federal government is trying to tell us.
Even homes that were in the lower price ranges didn’t fare so well last month. Home sales in the Midwest dropped by nearly 50 percent for the market priced between $100,000 and $250,000.
The expiration of the first-time homebuyer’s tax credit is one of the reasons many analysts are citing for the sudden drop in sales. The credit expired at the end of April and home sales have not done much since then. As a result, the inventory of unsold homes has risen to almost 4 million for the month of July. That means that there is more than a 12 month supply of homes if prices remain at the current state they are in. That number is higher than it has been in over 10 years and it doesn’t seem to be getting better any time soon.
Some people have been trying to sell their home for quite some time and they haven’t been able to get out from underneath them. Laurie Salaman, a New York resident, has had her home on the market for more than a year. She has dropped the price of her home by more than $25,000 and she still hasn’t had to many people show interest in it. She would like to move to the suburbs of New York but she can’t until she sells her home.
Other factors are contributing to the plummet in home sales. The unemployment rate for the nation is at about 9.5 percent. Some states are seeing higher rates than that which is hindering many people from being able to qualify for a mortgage even in the lower price ranges of homes. Combine all these factors with the uncertainty of the nation’s economy and individual jobs and you have a perfect storm of reasons why home sales have plummeted.
The only question is: How much more are sales going to plummet in August?
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