Despite hopes that the economy is recovering, one indicator is not pointing in that direction. The sale of existing homes has gone down, and the inventory has risen for the month of June. This was reported by the National Association of Realtors, who said that home sales during the spring had gone up because buyers wanted to take advantage of tax credits being offered. Those sales had to be completed by April 30th. Sales in the Northeast were up 7.9%, but everywhere else in the country, sales fell. This is expected to last through the summer. Currently, there are 3.99 million homes unsold in the US. This is the highest level since August 2009. There had been hope that the tax credits would have helped sell more homes. More foreclosures are expected in the coming months, which will cause the inventories to rise even higher. This should cause prices to drop in the near future. There is some hope in the fact that mortgage rates are the lowest they have been since 1971. Economists continue to expect that home prices will continue to decline throughout the year.
The Obama tax credits that were designed to prop up the housing market and help homeowners who were having problems have expired, and did not provide as much relief as hoped. Short-term solutions provide only temporary help when there are larger market issues in a struggling economy.
Timiraos, Nick. “Home Sales Dip as Unsold Inventory Persists.” The Wall Street Journal. 23 July 2010.
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