The downturn in home sales in June was the lowest level they've reached in the last four and a half years. According to the National Association of Realtors, home sales dropped by 3.8 percent to an annualized rate of 5.57 million annually. Analysts had expected a drop to 5.90 million annual rate.
Patrick Newport, an economist at Global Insight said, "When will sales turn around? Our view is that the downturn will continue into 2008. Given the level of unsold homes, however, nominal home prices will probably not rebound until 2009."
The current supply of homes for sale across the country stands at 4.2 million, which represents an almost 9 month supply at the rate they're now selling at.
In spite of the decreasing home sales, surprisingly the value of homes have continued to hold in June, as the media price of home increased by 0.3 percent, to finish at $230,100 on average. With the number of homes on the market, this won't hold for long.
Slow sales haven't just been relegated to lower end housing, as luxury homes and properties are also taking much longer to sell, and prime properties have had to cut their prices to move them.
What's interesting, at this time consumers have shifted using their homes to finance their purchasing back to credit cards. So a lot of the impact this would have had in the past isn't in play yet. If the market truly rebounds in 2009, people may have enough credit to make the impact upon the retail industry in the US minimal, as they tap their plastic to continue their buying.
If things tighten up as far as credit goes for consumers, we could have a period of time where retail shopping could drop in a big way.
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