Home prices in the U.S. declined in the 12 months through July, during which prices dropped 3.3%, according to the Federal Housing Finance Agency in Washington. However, when compared with June, home prices rose in July, climbing 0.8%.
“There’s a lack of confidence among homebuyers that is directly tied to the fact that people are worried about their jobs,” said John Burns, founder and chief executive of John Burns Real Estate Consulting in Irvine, California. The unemployment rate has stayed mostly above 9% for more than two years now, with the exception of a couple dips in February and March. The median income for U.S. households fell it its lowest level since 1996 last year, according to the U.S. Census Bureau.
U.S. residential real estate has declined $6.6 trillion in value in the last five years. The FHFA index, which is based on home purchases financed by Fannie Mae and Freddie Mac, has declined more than 18% from its high in April 2007. Other indices that include foreclosures that investors usually purchase with cash are down even more sharply.
Earlier this month, the Organization for Economic Cooperation and Development slashed its forecast for economic growth during the second half of the year. Gross domestic product is expected to increase 1.1% in the third quarter and 0.4% in the fourth, down from earlier predictions of 2.9%and 3%, respectively.
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According to a report from the National Association of Realtors, released yesterday, the average U.S. home sold for $171,200 in July, but the average fell to $168,300 in August. However, sales did rise in August, from a 4.67 million annual pace in July to a 5.03 million rate last month. But builders broke ground on fewer new homes in August than in the last three months, according to the Commerce Department. Housing starts declined by 5%.