Washington, DC, United States (4E) – Sales of existing homes in the U.S. surprisingly fell in June falling to its lowest level in eight months, an indication that the slowdown in the economy is extending into the second half of the year.
The National Association of Realtors (NAR) announced that June sales dropped 5.4 per cent to a seasonally-adjusted annual rate of 4.37 million, which is lower compared to May figures that were upwardly revised to 4.62 million. All four major regions saw a slowdown especially in the Northeast that fell 11.5 percent.
The results were significantly worse than analysts’ expectations. In a survey by the Dow Jones Newswires, economists predicted existing home sales to expand by 2.0 per cent to achieve an annual rate of 4.64 million sales.
An existing home sale is recorded upon closing a contract and this segment of the property market has been on the recovery path since falling to its low in July 2010 with an annual rate of 3.39 million. During the period leading to the subprime lending collapse and eventually the recession, sales reached its highest level at 7.25 million in September 2005.
NAR also reported that median sales price for June is at $189,400, which is an increase of 7.9 per cent compared to the $175,600 level a year ago. Lawrence Yun, chief economist of the NAR, said that the rise may be attributed to smaller share of transactions from foreclosures and sale of lower-priced properties. According to the survey, sale of foreclosures and other distressed properties comprised a quarter of the total sales in June, which is lower compared to the one-third share a year earlier.
Yun stated that the latest monthly figures do not suggest that the housing market has lost its momentum. Considering the legal risks, many title companies are still cautious of foreclosures, and there is also the problem of mortgage availability. Approval of new mortgages is currently at a slower due to the increase in refinance applications.
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