We saw it coming, now it is here.
Sales of previously owned homes plummeted in July to the lowest level in 2 1/2 years while the number of unsold homes peaked to a new record high as buyers waited on the sidelines for prices to come down.
Sales of existing homes dropped 4.1 percent in July from June to a seasonally adjusted annual rate of 6.33 million, the lowest level since January 2004, according to the National Association of Realtors.
“It’s worse than I thought,” said David Lereah, chief economist of the Realtors’ group. “The housing markets are fragile.”
“These are very disappointing numbers,” echoed Phillip Neuhart, economic analyst at Wachovia Corp., one of the country’s largest lenders.
The median prices of a home sold last month was $230,000, up just 0.9 percent from the same month last year, the smallest year-over-year increase since May 1995. The median is the half-way mark where half the homes sell for more and half sell for less.
The inventory of unsold homes in July rose to a record high of 3.8 million. At the current sales pace, it would take 7.3 months to sell the homes currently on the market — the longest time stretch since the spring of 1993.
Economists expect the housing market to weaken further.
“This isn’t the bottom yet,” said Neuhart. “We expect sales to decline through 2007.”