Existing home sales held steady in July despite the turmoil in the mortgage industry according to the monthly report issued by the National Association of Realtors´┐Ż (NAR) on Monday.

Total existing home sales which include single family residences, townhouses, condos, and coops were down 0.2 percent to a seasonally adjusted annual sales rate of 5.75 million units compared to an upwardly revised June sales rate of 5.76 million units. July 2007 sales are running 9 percent below sales in July one year ago.

Lawrence Yun, NAR senior economist, said "Home sales probably would be rising in the absence of the mortgage liquidity issues of the past two months. Some buyers with contracts have been scrambling when loan commitments did not materialize at the last moment, while other potential buyers are simply waiting for the mortgage market to stabilize.

"The rise in sales and prices in the Northeast region on a fairly consistent basis in recent months is promising because this was the first region that underwent sales and price weakness after the boom. Now, it appears that it will be the first region to climb back, indicating that other regions could follow a similar path."

Home sales in the Northeast were up 1.0 percent to a level of 1.02 million in July, but are 2.9 percent lower than July 2006 and sales in the West were up 1.8 percent in July to 1.12 million units annualized while still running 15.2 percent below one year ago. However, sales in the Midwest registered 1.35 million, 2.2 percent less than last month and 5.6 percent below 2006 figures and more than offset the increase in the Northeast and West regions. Existing-home sales in the South were unchanged at 2.26 million in July, but are 10.7 percent below a year ago.

The national median existing-home price for all housing types was $228,900 in July, down 0.6 percent from July 2006 when the median was $230,200, the highest monthly price on record. Regionally, the median price in the South was $186,300, down 3.2 percent from July 2006 and the median price in the Midwest fell 1.8 percent compared to one year ago.

Like sales, median prices were up in the West and the Northeast; the price in the former was $349,400, up 0.9 percent and in the latter was $290,900, up 5.9 percent from a year ago.

The inventory of available homes rose 5.1 percent at the end of June to 4.59 million by the end of July, which represents a 9.6-month supply at the current absorption rate, up from an upwardly revised 9.1-month supply in June.

The quarterly report on same house sales (based on information from Freddie Mac and Fannie Mae) published by the Office of Federal Housing Enterprise Oversight (OFHEO) is due to be released this Thursday and speculation is already rife that the survey results will foreshadow devastating housing news.
David Leonhardt and Vikas Bajaj writing in The New York Times business section on Sunday said that the median price of American homes is expected to fall for the first time since federal housing agencies began keeping track in 1950.

They said that the decline will probably be small, between 1 and 2 percent, but could continue into 2009 and will affect not only the boom areas on the coasts but also places in the Midwest and South which did not see huge increases early in the decade.

Such a decrease will have more of a psychological impact because many authorities had said that, while regional declines occur periodically, a nationwide decrease in housing prices would never happen. Even more important is an expectation that the housing slump will soon lead to a slowdown in consumer spending and economic growth as households will have declining equity to use to fuel what has been a booming cash-out-refi-and-spend cycle.

The Times quoted Moody's Economy.com, a research firm as predicting that the national median home price will probably not return to its 2007 peak in inflation-adjusted dollars for more than a decade.

The price decreases, however, will probably not come close to wiping out the increases homeowners have seen in the last few years.

We will summarize the OFHEO report when it is issued later this week.