US home sales at slowest pace in 15 years
SALES of previously owned US homes have dropped to their slowest pace in 15 years.
The figures from industry group the National Association of Realtors (NAR) signal a further loss of momentum in the country's economic recovery.
Sales dropped a record 27.2pc from June to an annual rate of 3.83 million units, the lowest level since May 1995. June's sales pace was revised down to 5.26 million units. Analysts had expected a fall of around 12pc.
Recent reports on jobless claims and manufacturing point to a slowdown in growth that may prompt the Federal Reserve to consider additional moves to boost the economy.
"Yesterday's data does not bode well for home prices," said Michelle Meyer, a senior economist at BofA Merrill Lynch Global Research in New York.
"There is a decent chance we (will) reach a new bottom for home prices. There's going to be a prolonged, painful drop."
The Standard & Poor's 500 Index fell 1.2pc to 1,054.54 at lunchtime in New York yesterday. The yield on the benchmark 10-year Treasury note dropped to 2.51pc and those on two-year notes touched a record-low 0.4542pc.
The pace of existing home sales is the slowest since comparable records began in 1999. The agents' group revised the June sales figure down to 5.26 million from a previously reported 5.37 million. Economists projected sales would fall 13pc. Previously owned homes make up about 90pc of the market.
Purchases of single-family homes also dropped 27pc, the biggest one-month decrease in data going back to 1968. July's 3.37 million annual rate was the lowest since May 1995. Compared with a year earlier, existing home sales fell 26pc before adjusting for seasonal patterns.
Fed Bank of Chicago president Charles Evans said that while the housing market and US economy have shown signs of improvement, recovery isn't yet assured.
"We are certainly not out of the woods," Evans said in a speech in Indianapolis before the housing report.
The recovery "seems to be extremely modest" and the central bank's "accommodative policy is appropriate," he said in reply to an audience question.
Sales last month fell in all four US regions, yesterday's report showed. Foreclosures accounted for 22pc of total purchases in July, while short sales, where banks agree to take less than the value of the mortgage, made up another 10pc, the NAR said. (Bloomberg)