Sales of previously owned homes rose in July from a 10-year low, though the gain was not enough to reduce the supply of properties on the market.
Resales rose 3.1%, which exceeded forecasts, to an annual rate of 5 million, from 4.85 million in June, the National Association of Realtors said Monday. The median price fell 7.1% from July 2007, and the number of homes for sale jumped to a record.
Record foreclosures have pushed property values down even more, luring bargain hunters. Still, stricter lending rules, rising unemployment, and a glut of unsold houses signal a persistently grim outlook for residential real estate.
"It'll be a while before we get a real recovery in housing," Stephen Gallagher, the chief U.S. economist at Societe Generale in New York, said before the report's release. "These things take time to work through. Prices have come off, so that's helping home sales a little."
The July sales rate was the highest since February. Sales were off 13% from a year earlier; resales were 5.65 million in 2007.
The rise in sales was not enough to keep up with the surge in properties coming on the market as foreclosures mounted.
A record 4.67 million unsold houses and condos were on the market in July, an 11.2-month supply at the current sales pace, matching the biggest inventory ever. The Realtors group has said a five- to six-month supply is consistent with a stable market.
The jump in inventory was driven by an increase in the supply of condos as projects started one or two years ago came on the market, the Realtors group said.
The median price of an existing home fell to $212,400 from $228,600 in July 2007.
"We are in a very tight credit-availability condition," Lawrence Yun, NAR's chief economist, said in a press conference.
Resales account for about 85% of the market. Sales of existing homes are compiled from contract closings and may reflect contracts signed months earlier.
For that reason, economists consider new-home sales, which are recorded when a contract is signed, a more timely market barometer. A report expected today from the Commerce Department may show that new-home sales fell in July for a third consecutive month.
Monday's report showed resales of single-family homes increased 3.1%, to a 4.39 million annual pace. Sales of condos and co-ops climbed 3.4%, to a 610,000 rate, the highest since November.
Tight credit conditions and continual declines in residential construction will weigh on economic growth in coming months, Federal Reserve policymakers said at their Aug. 5 meeting. The Fed's quarterly survey of bank loan officers showed 75% had made it tougher for prime borrowers to get a mortgage.
"I worry a lot about what's happening in housing," Martin Feldstein, a member of the committee that charts U.S. business cycles, said last week. "The number of negative-equity homes is exploding. Housing prices will continue to go down, driven by the large oversupply of houses and the increasing number of foreclosures."
