Decline Seen in Existing Home Sales

Laura Kusisto and Eric Morath reported in Thursday’s Wall Street Journal that, “Sales of previously owned homes slipped in July, a sign that higher prices are taking a bite out of U.S. housing demand.

“The pace of existing-home sales decreased 3.2% last month from June to a seasonally adjusted annual rate of 5.39 million, the National Association of Realtors said Wednesday. The decrease was the first since February.”

The Journal article noted that, “‘You’re running out of customers,’ said Sam Khater, deputy chief economist at data company CoreLogic. ‘There’s a logjam: You’ve got first-time buyers who can’t buy, trade-up buyers who can’t move up, and it’s grinding to a halt.'”

The Journal writers pointed also pointed out that, “One worrying sign in these markets is that inventory is swelling, suggesting demand is slipping as prices grow out of reach for many buyers.

“‘Prices have gotten so high and they’ve grown so quickly in these hot markets and people are afraid…maybe the housing market is at all-time highs. Last time there was this big correction,’ said Nela Richardson, chief economist at real-estate brokerage Redfin.”

The Journal article added that, “Limited supply helped fuel a 5.3% gain in the median home price, to $244,100, in July from the year-earlier month. Production of new single-family homes, which accounts for a small share of the overall housing market, is still about 30% below the long-term historical average, though a report this week showed a 31% jump in July from the same month last year.

“So far this year, existing home sales are trending near the pace recorded just before the recession began. Still, the pace is well below the peak reached in 2005, when more than 7 million properties were sold.”

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