Home sales plummet, but prices hold up

WASHINGTON, Aug. 24 (UPI) -- Sales of existing U.S. homes fell far below expectations in July, although home prices continued to rise, an industry trade group said Tuesday.

Sales dropped 27.2 percent compared to June to a seasonally adjusted annual rate of 3.83 million housing units. That rate is 25.5 percent below July 2009, when the annual rate stood at 5.14 million.

The sales figure, which includes condominiums, co-ops and townhouses, was expected to fall about half as far, to an annual rate of 4.6 million.

In spite of the drop to the lowest level since 1999 – the decline attributed to a closed down federal tax credit for first-time home buyers – the average price for homes rose 0.7 percent from a year ago to $182,600.

NAR Chief Economist Lawrence Yun said sales were expected to reach 5 million in the year, "given the rock-bottom mortgage interest rates and historically high affordability conditions."

"The pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs," he said.