Sales of previously owned US homes slumped by a record amount in July to their lowest pace in 15 years, suggesting further loss of momentum in the country’s economic recovery.
Existing home sales dropped a record twenty seven point two percent from June .. and the National Association of Realtors also revised the June figures downwards.
Improvement in the housing market is seen as key for the US recovery.
“This is a worrisome report and while it reflects the volatility caused by the end of the (government home-buyer) tax credits, it also indicates a deterioration in the underlying trend for housing demand,” said Michelle Meyer, senior US economist at Bank of America Merrill Lynch in New York.
“For the overall economy, the dangerous link to housing is home prices and this report signifies that home prices should fall considerably faster, which could tip the economy back into a recession. We are, however, not quite there yet but this is a worrisome report.”
As the figures were released, Chicago Federal Reserve President Charles Evans warned that the risk of a double-dip recession was higher than six months ago although he did not think output would contract, describing the recovery as ongoing but modest.
Last month foreclosed properties accounted for 22 percent of sales in the US.
First-time buyers accounted for 38 percent of transactions, the lowest in 12 months.