Americans’ long infatuation with owning a home, which even the economic collapse of 2008 could not kill, shuddered and stalled
last month. Housing sales in July plunged 25.5 percent below the level of a year ago, the National Association of Realtors said on Tuesday, as buyers lost the spur of a government tax credit. The steep descent surprised nearly every analyst and put the volume of single-family home sales at the lowest level since 1995. The financial markets took the news badly, with the Dow Jones industrial average closing down 134 points to a six-month low. As investors sought security, the yield on the two-year Treasury note fell to a record low. Mortgage rates are the lowest in modern memory while affordability, because of price declines of 30 percent in many areas, is the highest in at least a decade. The government is allowing buyers to put only a token amount down, guarantees lenders against default and regularly issues proclamations that the worst is over. Apparently, all of that is not enough to put a floor under housing. With unemployment steady for month upon month at more than 9 percent, and with millions heavily in debt or simply skittish, many potential buyers are lost to the market. No region was immune in July, with sales in the Northeast dropping 30 percent, the Midwest falling by a third, the South down 20 percent and the West off 23 percent.
By David Streitfield, August 24, 2010 NYT