While many people are pointing to the fact that existing home sales rose an annualized 7.2 percent in July over June, there is actually very little good news in today’s housing report, which comes just a day after we learned that more than one in eight mortgages in this country are now delinquent or in foreclosure.
In July, 532,000 existing homes were sold, up 11,000 from last month, and 28,000 more than the previous July. Put in perspective, cheerleaders are pointing to an average July increase of only 220 home sales per state. Is that more activity than in June? Yes, but it hardly seems to be evidence that the worst is behind us, especially considering foreclosure activity in July also hit a new record high.
Homes in the process of foreclosure, if borrowers cannot obtain a mortgage modification, will ultimately come back on the market, either for a distressed sale or after foreclosure. High rates of foreclosed homes being sold—the National Association of Realtors reported 31 percent of all sales were distressed sales—means that it is still difficult for regular families to be able to sell their homes because they are being forced to compete with fire sale prices. Indeed, the median sales price of homes fell 15.1 percent nationally over last July, with the west hardest hit by a 28 percent decline. Moreover, there are more existing homes available for sale today than at any point in the last eight months.
Given the record rates of delinquent mortgages and foreclosures, it’s hard to argue that a slight uptick in existing home sales indicates the housing crisis is over.
Andrew Jakabovics is the Associate Director for Housing and Economics at the Center for American Progress.