Existing Home Sales See Record 27-Percent Drop

A new report shows that existing sales sank 27.2 percent in July, which is the biggest one-month drop ever. According to the National Association of Realtors (NAR), this percentage represented a seasonally-adjusted annual rate drop to 3.83 million sales from 5.26 million the month before.

The Market Continues to Lose Sales

Despite the record-low mortgage rates we saw throughout the month of July, homeowners did not seem compelled to go out and buy a home. In fact, in addition to low levels of U.S. existing home sales for the month, inventories of unsold homes also rose in the month from 2.5 percent to 3.98 million.

This is the highest level seen since at least 1999, according to the NAR.

Why the Huge Drop in Home Sales?

Experts say that the significant drop in existing home sales had a lot to do with the phase out of the home buyer tax credit, which was very popular for offering first-time homebuyers, as well as those who wanted to upgrade to new homes, up to $8,000 or $6,500 respectively, in tax credits.

While the credit expires in September for those who have already signed for home and need time to close, anyone looking to search for a new home cannot claim the credit.

Looking to Buy?

If you’re on the market for a home and have missed out on the credit, it’s still a good time to take advantage of mortgage interest rates that are very low. If you’re having problems securing a mortgage loan due to the tightening of credit lending, there is mortgage assistance out there from the FHA, HUD and possibly even your local bank or credit union. Of course, it’s up to you to look around and actually see what’s out there.

Foreclosures are already predicted to drop more this year due to so many underwater mortgages still hanging in the balance, the dramatic drop in home sales is not a good look for housing. Unless the government finds a way to make purchasing homes more affordable to Americans still struggling in this tough economy, the market may never recover.