US existing home sales fell 2.6% in June

24 July 2008 17:48  [Source: ICIS news]

WASHINGTON (ICIS news)--US sales of existing homes fell 2.6% in June from May, pushing the inventory of unsold residential properties to an 11-month supply, the highest since 1984, the National Association of Realtors (NAR) said on Thursday.

 

The inventory of unsold homes is still shy of the record high reached in 1982 when a 13-month supply of vacant homes glutted the market, the realtors group said.

 

The fall in June sales put nationwide existing home transactions at a seasonally adjusted annual rate of 4.86m units compared with the 4.99m seen in May. 

 

June’s sales also were 15.5% below the 5.75m rate reported in the same month last year.

 

The inventory of existing homes for sale rose 0.2% in June to 4.49m units.  At current sales rates, that supply would last 11.1 months.

 

During more normal economic conditions, the inventory of unsold homes would be around 6m units and would represent a six-month supply.

 

The US housing market, especially new home construction, is a crucial downstream consuming sector for the chemicals industry, driving demand for a broad range of chemical and chemical derivatives such as paints, adhesives, paints and coatings, insulation, roofing and siding materials, plastic pipe and more.

 

The association said that according to its recent surveys, nearly 25% of potential home buyers are waiting on the sidelines, hoping for a better deal if housing prices continue to fall.

 

That waiting game among potential buyers creates a self-fulfilling prophecy, market analysts said, as the inventory of unsold homes rises - aided by foreclosures on nonperforming mortgage loans - and many buyers continue to hold back.

 

“About four in 10 homes are purchased by first-time buyers, which frees existing owners to trade up,” said Lawrence Yun, the association’s chief economist. 

 

Consequently, the association is urging the Congress to complete action on a long-pending housing stimulus package.

 

Earlier this week the US House of Representatives approved legislation that would provide recovery assistance to some homeowners burdened with expensive mortgage payments and give a $7,500 (€4,800) tax credit to first-time buyers. 

 

The Senate is expected to approve the package Friday and President George Bush has indicated he will sign it.

 

“With many potential first-time buyers on the sidelines, a first-time buyer tax credit would have a significant positive impact on both housing and the economy,” Yun said.

 

($1 = €0.64)

 

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