On or about the 25th day of every month the National Association of Realtors (NAR) releases the existing sales number. This number is the amount of previously owned condos, co-ops, and single-family homes that are sold each month. NAR then reports what the annual rate would be if the relative pace for that month were maintained for 12 consecutive months.
On Tuesday, August 24, 2010, NAR reported a number that was far worse than analysts expected. The consensus number expected for July was a drop in sales of 12% from the June figure, which would have brought the annual expected rate of 4.7 million sales. Instead, a 27% drop was reported, bringing the annual rate to 3.83 million units.
This is the lowest pace of sales in 15 years! This is an ominous sign for the economy.
According to NAR, historically home sales in April through July outpace the balance of the year. Not only was this terrible number within one of the four the busiest months for home sales but mortgage rates were under 5%, which is a historical low.
The stock market took a hit on this number, with the S&P 500 dropping 1.45% and the Dow Jones Industrial Average dipping under 10,000 intraday. July’s horrendous existing homes sales data predict fewer purchases of housing-related consumer products. A weak housing market also points to a higher personal savings rate, which is a big negative for an economy where 70% GDP is consumer related.
Now, with so many economic warning signs popping up, it is important for you to take charge of your financial future. Not only do I want you to protect your finances if the stock market continues to fall and the economy worsens, but a smart trader/investor can take advantage of such situations and profit immensely. Don’t be a bystander. Seize this moment and take the necessary steps to ensure you and your family’s financial well being.