The article talks about how existing home sales fell by 27.2% in July, which is the slowest pace of sales since 1999. Single family homes are even harder to sell apparently because they are at an low point that has not been reached since 1995. "July’s decline was the third consecutive monthly drop following the expiration of the home-buyer tax credit."
With the decrease in sales the months supply of homes rose from 8.9 to 12.5, the average is normally 5 months of supply. Ratios well above this level are historically correlated with short term price declines. Until the sales pace increases and/or the supply of inventory gets further worked off, price stability is unlikely. In July however, prices were relatively stable. The median sales price declined 0.2 percent to $182,600, ending a four month trend of price appreciation. From a year earlier, prices were up 0.7 percent.
The housing market has been weakening even though mortgage rates have been in decline. The housing market will improve once there is a significant decline in the unemployment rate. As the firms begin to panic less and hire more(because of the decreased productivity of the smaller labor force working for lower wages)and consumer confidence levels begin to rise, investment will increase and thus create jobs. These jobs will eventually increase consumer purchasing power and enable them to purchase houses. An increase in the employment rate will also enable more consumers to pay their mortgages on time (and especially at the record low rates they are at right now.)
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