As housing inventories reached new highs, existing-home sales in the United States fell in July to its lowest rate in more than two years. Industry economists discuss the drop and the impact of the softening real estate market on the U.S. economy.
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SPENCER MICHELS, NewsHour Correspondent:
The growing number of "For Sale" signs that are going up and staying up in many neighborhoods across the country is one indication that the once-booming housing market is beginning to slow down.
The National Association of Realtors reported that sales of previously-owned homes dropped 4 percent between June and July of this year to the lowest level in two-and-a-half years. That contributed to a new record-high inventory of homes on the market, now nearly four million.
Lower or stagnant selling prices are another indication of a weaker market. The median price of a home last month was up less than 1 percent compared to the same time a year ago, to $230,000, the smallest increase since 1995. That's a sharp contrast from recent years when the median price of a home shot up by nearly 60 percent since 2000.
REAL ESTATE AGENT:
To put a new microwave in…
Like many sellers, Harry and Glenna Heckathorn of Arlington, Virginia — recently one of the nation's hottest realty markets — were caught off-guard when they tried to sell their four-bedroom house for $969,000 in May.
GLENNA HECKATHORN, Home Seller:
About, oh, four or five weeks after that, we dropped the price to $929,000. And then it wasn't really a week later that we dropped it to $925,000. And still, the open houses were generating a lot of interest. We had a lot of people. They said nice things about the house. They didn't seem to think the price was unreasonable, but still there were no offers.
HARRY HECKATHORN, Home Seller:
The market is slow right now. Last year, we would have sold this house in about a week to two weeks time, probably pretty close to the asking price.
The Heckathorns also threw in two Vespa scooters as an added incentive for buyers.
The slowdown is not limited to existing homes. The latest figures on new home sales will be released tomorrow, and economists are predicting they will also decline.