Home sales are hitting the lowest level in over a decade, and it has economists worried. If a double-dip in the housing market occurs, then the recovery could be impacted further than it already has been.
The sales of existing homes have decreased by 27.2% in July, which was double what was expected by the analysts. This brings the annual rate to 3.83 million units. It is commonly believed that the end of the homebuyer tax credit is the reason behind much of the drop.
Many homebuyers hurried their purchases to beat the deadline on the credit. Now that it’s over, there is a drastic drop in sales.
Single family home sales are at the lowest they have been since May of 1995. It doesn’t help the matter that the number of homes for sale continues to increase. It rose 2.5% to 3.98 million.
Because of the large inventory and lack of buyers, prices are decreasing. This could impact the recession and recovery greatly. As housing prices fall, Americans have less confidence, and spend less money, resulting in fewer boosts to the economy.
Experts say that this won’t stop the recovery all together. While it may definitely slow down the pace at which America recovers from the recession, it’s unlikely to cause a double dip in the economy by itself.
The midwest saw the worst numbers in home sales, with a decrease of 35%. The northwest saw a drop of 29.5%. The west saw a decline of 25%, and the south saw a 22.6% decline.