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Economy in Brief

U.S. Existing Home Sales Collapse In Wake Of Tax Credit Expiration
by Tom Moeller August 24, 2010

Sales of existing homes showed the full effect last month of the expiration of the Federal home-buyer tax credit. July sales of existing homes collapsed 27.2% to 3.83M following modest declines during the prior two months, according to the National Association of Realtors. July sales were well short of Consensus expectations for sales of 4.63M. Total sales include sales of condos and co-ops. Sales of existing single-family homes alone fell 27.1% (-25.6% y/y) from June to 3.37M. (These data have a longer history than the total sales series). Sales of condos and co-ops fell 24.0% from last year. 

Despite the sales weakness, the median price of all existing homes held roughly steady m/m at $182,600 compared to a downwardly revised June level. Though prices remained off roughly 25% from the 2007 peak, they have risen 12.0% from the January low. The price of a single-family home slipped 0.1% to $183,400 (+0.7% y/y). Earlier price weakness sharply raised home affordability -- by more-than-half from the 2006 low, though recent price gains have lowered affordability moderately. The recent rise in home prices lowered homes' affordability by 2.2% versus one year ago. The median family income for existing home buyers was $60,498 and mortgage payments amounted to 15.7% of that total.

The number of unsold homes (single-family & co-ops) for sale rose in July after two months of decline but were down 1.9% y/y. At the current, lower, sales rate the months' supply of homes on the market surged to a record 12.5. For single-family homes, the inventory rose m/m to an 11.9 months' supply, also a record. 

The data on existing home sales, prices and affordability can be found in Haver's USECON database. The regional price, affordability and inventory data is available in the REALTOR database

Reasonable People Did Disagree: Optimism and Pessimism About the U.S. Housing Market Before the Crash from the Federal Reserve Bank of Boston is available here.

Existing Home Sales (Thous, SAAR) July June May July Y/Y 2009 2008 2007
Total 3,830 5,260 5,660 -25.5% 5,160 4,893 5,674
  Northeast 620 880 890 -30.3 863 845 1,010
  Midwest 800 1,230 1,330 -33.3 1,166 1,130 1,331
  South 1,540 1.990 2,150 -19.8 1,913 1,860 2,243
  West 870 1,160 1,290 -23.0 1,216 1,064 1,095
Single-Family Sales 3,370 4,620 4,980 -25.6 4,573 4,341 4,960
Median Price, Total, $ (NSA) 182,600 183,000 174,600 0.7 172,742 197,233 216,633
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