Home Sales Drop 27 Percent in July and Things Are Only Going To Get Worse for The U.S. Housing Industry

Thursday, August 26, 2010
By Paul Martin

Economic Collapse Blog
LewRockwell.com

On Tuesday the National Association of Realtors announced that existing home sales in the United States dropped a whopping 27.2% in the month of July. The consensus among analysts was that we would see a drop of around 13 percent, so when the 27 percent figure was announced it sent a shock through world financial markets. Only 3.83 million units were sold in July, which was down from 5.26 million in June, and which was the lowest number that the National Association of Realtors has ever seen since they began tracking this statistic back in 1999. To say that the real estate industry is alarmed by these numbers would be a tremendous understatement. What we are seeing unfold is essentially “Armageddon” for those involved in the housing and real estate industries. The real estate market is grinding to a standstill and a shockingly low number of people are actually in the market to buy a home right now. In the months ahead home sales may pick up a little bit, but only if housing prices start to fall. Why? Because right now there are tons of houses on the market and there are very few qualified buyers available to purchase them and potential buyers are starting to realize this. Buyers are beginning to understand that they have all the leverage now and they are waiting for prices to fall.

Anyone who has taken Economics 101 in college knows that when supply is high and demand is low prices will fall, and that is exactly the situation we have in the U.S. housing market right now.

At the moment, most home sellers in the United States are very hesitant to lower the prices on their homes too much. Many have no intention of selling their homes below what they originally paid for them, and many others truly believe that the housing market will eventually rebound.

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