Home sales report paints grim economic picture

Myrtle Beach, SC - By Brandon Herring - bio | email

MYRTLE BEACH, SC (WMBF) - A new report released Tuesday shows trouble in the real estate market. Sales of previously occupied homes fell in July to the lowest level in 15 years, according to the National Association of Realtors.

Additionally, the drop in existing homes sales from June to July fell 27 percent. That was the biggest monthly drop on records dating back to 1968.

The Grand Strand also saw a decline in sales, but the drop was not as bad as the majority of the country according to Tom Maeser with the Coastal Carolina Association of Realtors. Maeser said the Grand Strand still has investors buying a large percentage of the real estate in the area.

Nonetheless, the report shows consumer confidence continues to decline as well. Coastal Carolina finance and economy professor Dr. Robert Salvino said many people continue to put off home ownership because of their lack of confidence in the economy overall.

"I think the big-ticket purchases reflect that," Salvino said. "Wealth and stability are very uncertain, and I think this probably reflects that."

Salvino pointed out that the decline in home sales follows the end of the first-time home buyer incentive, which boosted sales in the spring. He said the recent report may indicate that the rest of the year may be grim for real estate.

Salvino also believes unemployment is a major factor in the decline of homes sales too. He said the real estate market may continue to struggle until more people get jobs.

"In my perspective employment drives spending," Salvino said. "So if employment is not there, if the stability is not there, then spending is not - in any rational individual's mind - spending is not going to be there."

Reports due out later this week will also provide insight into the health of the economy. Data on new home sales, durable goods orders, weekly jobless claims and other consumer sentiment are scheduled for later in the week.

Copyright 2010 WMBF News. All rights reserved. (The Associated Press contributed to this report.)