Existing-home sales fell in July to a seasonally adjusted annual rate of 3.83 million units, according to The National Association of Realtors® (NAR). Much of the decline is directly attributed to the expiration of the home buyer tax credit. Despite slower sales, prices continued to gain.
NAR chief economist Lawrence Yun is realistic about the recovery process and sees brighter days ahead. "Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired. Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September,” he said. “However, given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs."
Freddie Mac reported the average July commitment rate for a 30-year fixed-rate mortgage dropped to 4.56 percent, down from 5.22 percent in June 2009. These low rates are creating great opportunities for buyers looking to take advantage of today's market, according to NAR President Vicki Cox Golder. "Mortgage interest rates are at record lows, home prices have firmed and there is good selection of property in most areas, so buyers with good jobs and favorable credit ratings find themselves in a fortunate position," she said.
An NAR survey shows an increase in investor activity. Investors accounted for 19 percent of July's existing-home sales, up from 13 percent in June. All-cash sales also rose to 30 percent in July, up from 24 percent the month before.