Existing Home Sales Plunge -27%

The latest report from the National Association of Realtors (NAR) shows that purchases of existing homes plunged -27.2% to a 3.83 million annual rate. The pace compares with the median forecast of a 4.65 million rate, according to a Bloomberg News survey. 

The number of previously owned homes on the market rose +2.5% to 3.98 million. At the current sales pace, it would take 12.5 months to sell those houses, the highest since at least 1999 and compared with 8.9 months in June. The months’ supply of single-family homes at 11.9 months was the highest since 1983, NAR said.  Sales last month fell in all 4 U.S. regions.  Foreclosures are boosting the so-called shadow inventory, and competing with owners trying to sell properties.

Home seizures increased almost +4% in July from the previous month, with 325,229 properties last month getting a notice of default, auction or bank repossession, RealtyTrac Inc. said August 12. 

Residential real estate may keep struggling for the rest of this year, while into “2011 and beyond, it is difficult to determine,” Richard Dugas, chief executive officer at Pulte Group Inc., said in an August 20 interview with Bloomberg Television. Pulte is the largest U.S. homebuilder by revenue. 

“Demand is low across the country,” Dugas said. “You have record-low interest rates and excellent pricing, but consumer confidence eased. We really need the economy to improve and job creation to take hold before people feel comfortable stepping into a home.”