Sales of new homes reach the lowest ever levels – A 12.4% Drop!

The month of July in 2010 registered an unexpected fall in the sales of new homes. It dipped by 12.4% registering the lowest ever level in the housing market. The housing market seems to continue with its bad state ever after the tax credit boost from the Fed expired. With the drop of 12.4% the annual rate (seasonally adjusted) came down to 276,000 in July, which had a downward revision from 315,000 in the month of June, 2010. The sales compared to July 2009 fell by 32.4%.

The saddest part is that the experts had forecast to have a sale of 334,000, which was not realized. The industry is having a hangover that was developed by the recession and will continue to face this bad phase for several reasons. They are over-stocked inventory of lender repossessed properties, strict credit rules, high levels of unemployment and hike in the number of foreclosures.

March, as well as April, saw an increase in the house sales, but the reason was none other than the tax credits given to the consumers by the Federal government. As the $8,000 tax credit expired, the high tide subsided and in May, just after the expiration of the credit, the figures went down to 281,000 and a modest pace was continued in June, but a sudden fall was registered in July. A report from the Real Estate market showed that the sale of existing homes went down by 27.2% in the month of July. This is just double the amount expected by the economists and analysts. The sale of single-family homes went down to the record low since 1995.

Economists believe that the economy will revive only when the housing market becomes juicy, but ironically, there are no such possibilities in the near future. Several reports show that the prices of homes declined in July and drop was of a considerable amount. 210,000 homes (new) were estimated to be sold in July, which has been the lowest figure since September 1968. This ill fate is due to the large number of foreclosures resulting out of consumers becoming delinquent, because of unemployment. But the prospective homebuyers will be benefited, once the lenders will sell off the houses at discounted prices, which mean that the would-be homeowners will make huge savings.

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