The National Association of Realtors (NAR) released the July existing home sales data today, and the drop off was much sharper than most industry watchers expected. Nationally, sales of existing homes dropped 11.2% from July, 2005; in the Northeast, the drop was higher at 13.3%. Overall, the median price squeaked out an increase over July, 2005, posting a .9% rise nationally and .4% in the Northeast, saving NAR from having to make the devastating pronouncement that prices are falling. But here in the Northeast, the average sales price declined 1% from July 2005, and was down 2.9% from the June, 2006 peak.
The latest housing sales data has been getting a LOT of media play today (it was the lead story on the national news on all 3 networks). While many in the industry may lament all the coverage of ‘bad’ news, I think its good. Sellers may finally get the message that the market has changed. Sales aren’t off 11.2% because of a lack of demand. Far from it. I get plenty of calls from buyers looking for houses. And you can’t blame it all on mortgage rates; they’ve been steadily falling again (although are higher than their lowest levels of 2005.)
No, the lion’s share of the blame rests with sellers, and their stubbornly high price expectations. True, buyers are a little on the low side in terms of what they’re willing to pay, but no where near as far as sellers are to the high side in terms of their price expectations.
In the last 2 weeks, I’ve seen some dramatic price cuts in the Sullivan MLS — some houses have dropped as much as 20% to 25%. (Note: those cuts were on some particularly overpriced houses. I’m not suggesting that overall asking prices need to drop 25% before they get into market range.) All the media coverage today will lead to many sellers rethinking their positions, and I expect we’ll see an acceleration of cuts in asking prices over the next week or two.
Sellers, there are buyers willing, ready and able to buy your house — they just don’t want to pay your price.