As widely expected, existing home sales fell sharply last month. The expiration of the federal government’s home buyer tax credit was probably a factor. Whatever the reason, the news is unmistakably bearish for the housing market, with repercussions for the broader economy as well. As the National Association of Realtors (NAR) advised in a press release accompanying today’s update: “Sales are at the lowest level since the total existing-home sales series launched in 1999, and single family sales – accounting for the bulk of transactions – are at the lowest level since May of 1995.”

NAR’s chief economist, Lawrence Yu, tried to put a positive spin on the dire numbers. “Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired,” he said via the press release. “Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September. 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.”
That’s a lot of speculating about what could go right. What do other analysts outside the real estate world say? Here’s a sampling of the chatter. Unsurprisingly, the pundits are quite grim…
Sales of U.S. Existing Homes Fell in July to 3.83 Million Rate
Courtney Schlisserman/Bloomberg
“‘This is a devastating reading on the U.S. housing market,'” said Derek Holt, an economist at Scotia Capital Inc. in Toronto. “‘There’s such an inventory overhang, it shows there will be pressure on prices’ in the months ahead. ”
Sales of existing U.S. homes fall 27%
Alejandro Lazo/LA Times
“‘From our vantage point, the first-time home-buyers credit pulled forward demand — by definition this is what stimulus measures achieve — however the issue this time is that there was so little demand to be pulled forward, the credit has left no demand for the summer,’ Dan Greenhaus, chief economic strategist for Miller Tabak + Co., wrote in a research note Tuesday morning. ‘The result is exactly what we’re seeing: a near, if not outright, collapse in housing.'”
Plunging home sales could sink recovery
Hibah Yousuf/CNNMoney
“‘Home sales were eye-wateringly weak in July,’ said economist Paul Dales of Capital Economics. ‘It is becoming abundantly clear that the housing market is undermining the already faltering wider economic recovery. With an increasingly inevitable double-dip in housing prices yet to come, thing could get a lot worse.'”
Home sales plunge 27 pct. to lowest in 15 years
Alan Zibel/AP
“‘The housing market is undermining the already faltering wider economic recovery,’ said Paul Dales, U.S. economist with Capital Economics. ‘With the increasingly inevitable double-dip in prices yet to come, things could yet get a lot worse.'”