Economists were stunned Wednesday as the National Association of Realtors announced that existing home sales fell by a whopping 27% in July. This quickly brought about concerns the economic turnaround the Obama administration has been touting.
New home purchases fell to their lowest in 10 years at a rate of 3.8 million.
With home sales falling this becomes a psychological factor in the minds of Americans. The days of flipping homes from profit are gone and people continue to think of their home as a store of wealth.
When home prices fall, people feel less wealthier which translates to the effects of saving money. That in turns means the economy expands less as money is not spent.
It is likely that the drop in existing homes sales for July was caused by the end of home buyer tax credits that expired in April. This, even though mortgage rates also dropped to new lows.
These numbers are weak and shows a sign that the economic recovery has taken a turn for the worse.
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