Oops, It Happened Again...
(Reuters) - "The pace of existing home sales in the United States fell a sharper-than-expected 4.1 percent in July to their lowest level since January 2004 as the downturn in the U.S. housing sector accelerated, the National Association of Realtors said on Wednesday."
"The supply of homes for sale at the end of July jumped sharply by 3.2 percent to 3.86 million units. This represented a 7.3 months' supply, the highest since April 1993."
"Economists were caught off guard by the severity of the drop and said the slowdown in sales activity and the associated wealth effect on consumers could drag down the overall economy."
"Sales of existing U.S. homes fell for a fourth consecutive month to a seasonally adjusted annual rate of 6.33 million units in July from a downwardly revised 6.60 million unit pace in June. The July pace was 11.2 percent below the July 2005 pace of 7.13 million."
"Analysts had expected home resales to slow to a 6.55 million unit pace from June's originally reported rate of 6.62 million units.""NAR Chief Economist David Lereah said the increase in the supply of available homes so far this year was the sharpest on record."
'"What we are experiencing right now is an inventory and price adjustment," Lereah said. The housing market is in transition, he said, "and there is pain in that transition."'
"Lereah said the slowdown represented both cooling of overheated high-priced markets and sales declines in some markets that were struggling with a slowing economy, such as Midwest manufacturing cities."
"The housing sector is fragile," said David Lereah, the association's chief economist.
"For five years running, home sales had hit record highs as low mortgage rates lured buyers. But the housing sector has lost steam this year as mortgage rates have gone up and would-be buyers have grown cautious amid high energy prices and a slowing economy."
"Consumers who watched their homes rise rapidly in value over the last several years felt wealthy and more inclined to spend. They also borrowed against their homes — treating them like ATMs — to support their spending ways."
"Wednesday's report shows that the bloom is off the rose."
Wall Street Journal
“For years, real-estate brokers and home builders promised that the soaring property market eventually would glide to a soft landing. It isn’t working out that way. The rapid deterioration of the market over the past 12 months has caught many homeowners and builders off guard. Some are being forced to cut prices far below what their homes could have fetched a year ago.”
“‘It would be difficult to characterize the position of home builders as other than in a hard landing,’ says Robert Toll, Toll Brothers CEO.”