Real Estate Stats show big sales drops in May, end of tax credit brings new woes - Kansas City sees big drops also

Real Estate Stats show big sales drops in May, end of tax credit brings new woes 

New-home sales tumbled 33 percent last month to a record low annual pace of 300,000, the Commerce Department said this week, and that's only half the bad news. Sales of previously owned homes fell 2.2 percent in May, the National Association of Realtors said, even as mortgage rates stayed at all-time lows. The end of the April tax credit put a strain on a market still hurting from the worst collapse since the Great Depression. Foreclosures may reach 1.9 million this year after a record 2 million in 2009, according to Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Penn. In the near future, combined sales of new and existing homes will drop 12 percent in the third quarter from the three months ending June 30, according to a forecast by Fannie Mae.

The median U.S. home price slid 29 percent to an almost eight-year low of $164,600 in February from a peak of $230,300 in July 2006, according to data from the Realtors group. Prices will drop 3.6 percent this year after falling 4.5 percent in 2009, the Washington-based Mortgage Bankers Association estimates. All this bad news - lower prices, fewer home sales and a drop in residential construction - will sap consumer spending. In the end, unemployment is the main reason housing is weakening without the tax credit to spur demand. People just don’t buy homes when they are worried about their jobs, experts said.


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Blog post written by the Dowell Taggart Team of RE/MAX Best Associates

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