Home sales take a sharp turn down

@CNNMoney August 18, 2011: 3:32 PM ET

NEW YORK (CNNMoney) -- Sales of existing homes fell unexpectedly in July, as strict lending and low appraisals prevented consumers from scooping up some of the cheapest houses since 1970.

Sales of previously owned homes tumbled 3.5% last month to an annual rate of 4.67 million, down from 4.84 million in June, according to the National Association of Realtors.

Economists had expected July sales to come in at a much higher rate of 4.87 million homes, according to consensus estimates from Briefing.com.

From the same month a year ago, sales are up 21%. Meanwhile, the national median home price in July was $174,000 -- down 4.4% from a year earlier.

While the struggling housing market has made buying a home increasingly affordable for consumers, many can't get financing from lenders to make purchases and therefore help the market recover, said NAR chief economist Lawrence Yun.

Mortgage rates at record lows

"Affordability conditions this year have been the most favorable on record dating back to 1970, but many buyers are being held back because banks are offering financing to only the most highly qualified borrowers, ignoring a large share of otherwise creditworthy buyers," Yun said.

"Those potential buyers represent the difference between an uneven recovery and a much more robust housing market that could stimulate additional economic activity and create jobs," he added.

Contract failures, largely caused by declined mortgage applications or appraisals below the negotiated price, were unchanged in the month. But 9% of realtors said that a contract was delayed in the past three months because of low appraisals, while another 13% reported that contracts were negotiated to a lower sales price because an appraisal came in below the price that had initially been agreed upon.

U.S. 'dangerously close' to recession

There were 3.65 million existing homes on the market at the end of July, according to the report. At the current sales rate, it would take 9.4 months to sell through that inventory -- up from 9.2 months in June.

Home sales rose in the Northeast and Midwest, but the gains were offset by declines in the West and South. Distressed homes, which include foreclosures, accounted for 29% of sales in July.

Plans for new home construction also came in weaker than expected in July. After showing some strength just a month before, new home construction slumped in July, the Commerce Department said earlier this week.  To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed4.25%4.43%
15 yr fixed3.21%3.17%
5/1 ARM3.56%3.21%
30 yr refi4.14%4.37%
15 yr refi3.13%3.17%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Economic Calendar
Latest ReportNext Update
Home pricesAug 28
Consumer confidenceAug 28
GDPAug 29
Manufacturing (ISM)Sept 4
JobsSept 7
Inflation (CPI)Sept 14
Retail sales Sept 14
CNNMoney Sponsors
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.