Home sales plunge 27%

August 25, 2010 at 12:00a.m.

Staff/wire report

washington

Sales of previously occupied homes plunged last month to the lowest level in 15 years, despite the lowest mortgage rates in decades and bargain prices in many areas.

July’s sales fell by more than 27 percent to a seasonally adjusted annual rate of 3.83 million, the National Association of Realtors said Tuesday. It was the largest monthly drop in records dating back to 1968, and declines were recorded in all regions of the country, including the Mahoning Valley.

The area saw a significant drop in previously occupied home sales in July, compared with earlier this year, said David Klacik, president of the Youngstown- Columbiana Association of Realtors. Tax credits for new homebuyers helped drive spring sales, he said, and many homebuyers made sure to buy before the credits expired.

“We have been coming off of a high,” Klacik said. “We always knew that, at least in the short term, we would see a decrease.”

Sales in the Valley have not declined as sharply as they have in other real- estate markets, he added.

“We are much more stable than other markets,” Klacik said. “We have seen a decrease, but as far as the Valley goes, we are doing fine.” Unlike buyers in other areas, local potential buyers are not likely to think that home prices have further to fall, he said.

Sharp declines were recorded in all regions of the country last month.

The plunge in home sales also magnified fears about the broader economy.

“The housing market is undermining the already-faltering wider economic recovery,” said Paul Dales, U.S. economist with Capital Economics. “With the increasingly inevitable double-dip in prices yet to come, things could yet get a lot worse.”

Sales were particularly weak among homes in the lower- to midpriced ranges. In the Midwest, homes priced between $100,000 and $250,000 tumbled nearly 47 percent.

As sales have slowed, the inventory of unsold homes on the market grew to nearly 4 million in July. That’s a 12.5-month supply at the current sales pace, the highest level in more than a decade. It compares with a healthy level of about six months.