U.S. sales of previously owned homes sank 27.2 percent in July -- the biggest one-month drop ever -- largely because of the phase-out of a federal tax credit, the National Association of Realtors said today.
Existing-home sales fell to a seasonally adjusted annual rate of 3.83 million in July from 5.26 million in June, MarketWatch reported after the release of the Realtors' data. Sales of single-family homes fell to the lowest rate in 15 years.
In July 2009, existing homes sold at an annual rate of 5.14 million.
The inventory of unsold homes rose 2.5 percent to 3.98 million, representing a 12.5-month supply, the highest level since at least 1999.
Many buyers took advantage of a temporary tax credit earlier this year to save up to $8,000, but they had to sign contracts before the end of April to qualify. As a result, sales that might have taken place later in 2010 were squeezed into the first few months of the year, MarketWatch said.
Home purchases were expected to decline after the expiration of the tax credit, and that is exactly what has happened. After rising 7.6 percent in April, existing-home sales fell 2.2 percent in May and 7.1 percent in June.
The median sales price edged up 0.7 percent in the past year to $182,600 in July, the Realtors said.
The data on existing-home sales are based on closings, which usually occur a month or two after the sales contract is signed.