Home sales continued their downward spiral in July while housing inventories hit a record high, according to figures released Wednesday by the National Association of Realtors.
Sales of existing homes were down 11.2 percent from July 2005 to a seasonally adjusted rate of 6.33 million units, putting last month’s home sales at the lowest level since 2004. Inventories also spiked to a record high of 3.86 million. That figure represents 7.3 months sales supply — the biggest inventory since spring 1993.
In the Washington area, the flagging market was even more pronounced. In Northern Virginia, for example, housing inventories increased 147 percent from July 2005 to July 2006. There are nearly 12,000 homes on the market in Northern Virginia alone, up from less than 5,000 last year. And for the first time, the region saw home prices depreciate. The average sales price in July was $537,731, a nearly 4-percent dip from the previous year.
Despite the dismal data, housing experts continue to counter with positive predictions.
“Many potential home buyers have been on the sidelines, some ‘kicking the tires,’ but mostly waiting for sellers to compromise on prices and terms,” said David Lereah, chief economist for the National Association of Realtors. “Now sellers in many areas of the country are pricing to reflect current market realities. As a result, there could be some lift to home sales, but it’ll likely take some months for price appreciation to rise.”
“We’re not in denial,” said Jill Landsman, a spokeswoman for the Northern Virginia Association of Realtors. “But what we are is highly optimistic that, yes, we may be in for a little bit of a bumpy road, but the bumps will go away.”
The Associated Press contributed to this report.
Comeback seen in rental market
The slumping housing market has translated into positive gains for the rental market, according to data released Wednesday by the National Association of Home Builders.
As consumer confidence in the housing market dips, rental units have made a comeback, said David Seiders, chief economist for NAHB.
The Multifamily Market Index, which tracks rental and condo demand, reached an all-time high in the second quarter of 2006 for both luxury and lower-priced rentals.
“We are in the midst of a solid comeback on the rental apartment side of the multifamily housing market,” Seiders said. Over the last three years, “thousands of existing rental units had been converted to for-sale units to meet what seemed an insatiable appetite for condos. As a result, the supply of rental units is very tight at a time when the demand pendulum is swinging back to rentals.” – Katie Wilmeth
