Sales of existing homes fell in July in the Washington metro area. There were only about 7,000 sales - a stunning decline from the nearly 12,000 sales recorded in April.
Of course, April’s sales were boosted by the expiration of the federal tax credit on April 30, but if you compare July’s sales to July of last year, you find that sales were down by 20 percent. So no matter how you look at it, last month was a rather slow sales month.
That’s especially surprising considering how far mortgage interest rates have fallen. Rates have been low for quite awhile, but last month we saw the average interest rate for a 30-year fixed-rate mortgage fall to 4.50 percent. Rates on 15-year fixed mortgages fell below 4 percent.
Even such incredible rates failed to stimulate much buyer activity, and I believe that bears out one theory folks have about the federal tax credits.
The theory says that while credits of up to $8,000 might cause some people to buy homes when they otherwise would have rented, the credits might also move up buying decisions that would have occurred later in 2010.
This would, of course, be an exceedingly difficult theory to prove, one way or the other. But I think July’s stats lend some weight to the idea that the spring market “stole” some activity from the summer. Otherwise, we likely would have seen a little bump in buyer activity when rates fell that low.
If rates remain low, they could be more helpful in the fall and winter markets. By then, people may resume buying and selling for the usual reasons: because they experience changes in work, family size, budget, etc.
Send e-mail to csicks@gmail.com.
Please read our comment policy before commenting.