In yet another sign of the troubled housing market infecting the ailing credit market, the number of home resales plunged to a record low in July. The measure, which tracks the number of Americans signing contracts to buy previously owned homes, dropped 12.2% to 89.9, its lowest level since September 2001. Bloomberg had projected a 2.2% drop.
The market slump may curb consumer spending by depressing property values. One economist put it plainly: “The housing market is bad and is going to stay bad for some time.” Analysts say prospective homeowners face higher short-term mortgage rates and tougher loan standards. But a realty economist was more optimistic, arguing the market has been “stabilizing somewhat” since mid-August.