California HomesThe National Association of Realtors today released Existing Home Sales data for July 2010. Existing-home sales were sharply lower in July following expiration of the home buyer tax credit but home prices continued to gain, according to the National Association of Realtors®. Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 % to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 % below the 5.14 million-unit level in July 2009.

Single-family home sales dropped 27.1 % to a seasonally adjusted annual rate of 3.37 million in July from a pace of 4.62 million in June, and are 25.6 % below the 4.53 million level in July 2009; they were the lowest since May 1995 when the sales rate was 3.34 million. Existing condominium and co-op sales fell 28.1 % to a seasonally adjusted annual rate of 460,000 in July from 640,000 in June, and are 24.0 % below the 605,000-unit level in July 2009. Single family sales – accounting for the bulk of transactions – are at the lowest level since May of 1995.

Northeast: -29.5 % to an annual pace of 620,000 in July and are 30.3 % lower than a year ago. The median price in the Northeast was $263,800, up 4.8 % from July 2009.
Midwest: -35.0 % in July to a level of 800,000 and are 33.3 % below July 2009. The median price in the Midwest was $151,600, down 2.8 % from a year ago.
South: -22.6 % to an annual pace of 1.54 million in July and are 19.8 % below a year ago. The median price in the South was $156,300, down 3.3 % from July 2009.
West: -25.0 % to an annual level of 870,000 in July and are 23.0 % below a year ago. The median price in the West was $224,800, up 3.3 % from July 2009.

California continues to post poor results for the housing sector. Once again California short sales and foreclosure figures rose. Ladera Ranch short sales and REO’s continued to spark interest in South Orange County housing.

A parallel NAR practitioner survey shows first-time buyers purchased 38 % of homes in July, down from 43 % in June. Investors accounted for 19 % of sales in July, up from 13 % in June; The balance were to repeat buyers. All-cash sales rose to 30 % in July from 24 % in June. Distressed home sales are unchanged from June, accounting for 32 % of transactions in July; They were 31 % in July 2009. The national median existing-home price for all housing types was $182,600 in July, up 0.7 % from a year ago. The median existing single-family home price was $183,400 in July, which is 0.9 % above a year ago. The median existing condo price was $176,800 in July, down 1.7 % from a year ago.

Single-family median existing-home prices were higher in 11 out of 19 metropolitan statistical areas reported in July in comparison with July 2009 (the price in one of 20 tracked markets was not available). However, existing single-family home sales fell in all 20 areas from a year ago. Raw unsold inventory is still 12.9 % below the record of 4.58 million in July 2008. Total housing inventory at the end of July increased 2.5 % to 3.98 million existing homes available for sale. This represents a 12.5-month supply at the current sales pace, up from an 8.9-month supply in June. This is a record amount in terms of months of supply (determined by pace of home sales).

Lawrence Yun, NAR chief economist says: “Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired. Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September,” he said. “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. “Even with sales pausing for a few months, annual sales are expected to reach 5 million in 2010 because of healthy activity in the first half of the year. To place in perspective, annual sales averaged 4.9 million in the past 20 years, and 4.4 million over the past 30 years” “Thanks to the home buyer tax credit, home values have been stable for the past 18 months despite heavy job losses,” Yun said. “Over the short term, high supply in relation to demand clearly favors buyers. However, given that home values are back in line relative to income, and from very low new-home construction, there is not likely to be any measurable change in home prices going forward.”

HOUSING IS STAGNANT and will likely remain stagnant until mid-term elections pass and housing finance reform takes shape. With home inventory on the rise, the shadow inventory discussion should get more attention from the media now. Perhaps the Administration’s true intentions with HAMP were to slow up the foreclosure process and spread out the disposition of REO over a longer period.