The national housing holding pattern, reflected in dismal July home sales, is throwing a wrench into an already weak economic recovery. The sputtering housing market is a reaction to the faltering recovery, and vice versa.
As long as unemployment remains high - stoking uncertainty and fear in the economy - home sales remain stuck on "no deal." Complicating matters, of course, are the record numbers of foreclosures, prompting struggling banks to tighten lending standards.
Last month, housing sales fell precipitously. The Midwest experienced a 35 percent drop in sales. Northwest Ohio mirrored that decline. The Toledo Board of Realtors reported 446 area homes sold in July, down from 738 in June and 625 for July, 2009.
Everywhere, it seems, buyers and sellers are in a standoff over prices. Buyers are waiting for housing prices to slide even farther than rock bottom. In the past year, Toledo-area housing prices were down 4.2 percent, or nearly three times the national average.
In the past five years, according to a recent study, Toledo housing prices fell 13 percent, compared with 4.4 percent nationally over the same period. Increasingly, home sellers are balking at making more cuts to their listing prices, preferring instead to wait until the market improves.
That might take awhile. Despite the lowest mortgage rates in decades, July sales of previously occupied homes plunged to the lowest level in 15 years.
Something's got to give. Another one-time government incentive to spark sales isn't the answer. Meanwhile, the immobilized housing market continues to undermine a wider economic recovery that could again spur home sales at prices agreeable to both buyers and sellers.
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