Repo Homes Sales Fall While Overall Home Sales Rise
As first time homebuyers made their purchases in July to beat the approaching deadline of the federal tax credit program, total home resales across the country soared in July by the biggest rate seen in more than 10 years, according to the National Association of Realtors.
According to the NRA, home sales in July increased by 7.2 percent to an adjusted annual pace of 5.24 million, compared to the 4.89 adjusted annual pace in June. It was the highest adjusted home sales level since August 2007 and marked the fourth consecutive month that sales increased on a month-over-month basis.
Based on Thomson Reuters’ survey of economists, home sales for July were expected to reach an adjusted yearly pace of 5 million. The NAR data indicated an adjusted annual pace higher by 0.24 million.
In July, sales of repo homes and other distressed houses comprised about 33 percent of overall home sales, a decline from the percentage in July last year. Among the two cities with the highest levels of foreclosure sales were Orlando and San Diego as their price levels fell to lower levels. As a result, brokers have been asking lenders to release their foreclosure properties into the market.
These lower-priced foreclosure sales pushed down by 15 percent the median home sales price nationwide to $178,400.
The federal tax credit contributed significantly to overall home sales, according to top NAR economist Lawrence Yun. He said he hoped Congress would extend the tax credit so the sales momentum would not stop. The real property industry has been lobbying lawmakers to extend the tax credit, which is set to expire on November 30.
First time homebuyers need to complete their home purchase transactions before December 1 to be able to take advantage of the 10-percent tax credit, which can reach $8,000.
PNC Financial senior economist Robert Dye said it would not be surprising if home sales decline after the federal tax credit expires.
In July, the number of unsold houses increased to 4.1 million, compared to the 3.8 million units sold in June. The inventory is equivalent to 9.4 months worth of supply if current home sales rate is considered, according to real estate analysts.
Meanwhile, the Labor Department said that the unemployment rate decreased in July in 17 states and increased in 26 states. Analysts contend that job losses have been driving foreclosures in the past months.
