The National Association of Realtors (NAR) shared statistics for home sales in July of 2011….and the news isn’t great.
Their index of sales agreements dropped 1.3% in the month of July, landing at a reading of 89.7. To put it into perspective, economists say that a reading of 100 is considered ‘healthy’. The index reached a similar level in April 2010, but signings are about 18% above the June 2010 reading (75.9) which was the lowest since the housing market collapsed over 4 years ago.
The signing of contracts is a pretty good indicator of which direction the housing market is going — when the number of people who sign agreements to purchase homes falls, it is yet another bit of evidence showing that the tough housing market is hurting the economy. The National Association of Realtors group also said that a large number of buyers actually canceled contracts once the appraisals showed the houses were worth less than the original agreed to price. And, since a sale isn’t final until the mortgage is closed, this is a depressing trend for homebuyers but possibly good news for those offering rentals. For the 3rd month in a row, sales of new homes (in July) fell again and this year is on track to be the worst for new home sales since 1963!