The housing and mortgage markets were hit with yet another blast of ugly news Wednesday morning with new home sales falling 12.4% in July and the Mortgage Bankers Association (MBA)reporting that purchase money loans now account for just 17.6% of all new loan applications.
The only good news for lenders is that the yield on the 10-year Treasury fell to a new 52-week low, which means mortgage rates likely will fall even further.
According to figures compiled by the U.S Census Bureau, sales of newly constructed single-family homes fell to a seasonally adjusted annual rate of 276,000 in July from a 315,000 rate in June. In May, the sales rate was 281,000 — the lowest level since 1981.
The National Association of Home Builders had hoped to see an improvement in sales during July, but the slowing economy, poor job outlook, and expiration of the homebuyer tax credit kept potential buyers on the sidelines.
Barclays Capital analysts noted that the decline in July "completely erases June's 12.1% gain and brings new home sales to the lowest level in the history of the series."
New home sales fell throughout the nation with the West experiencing the biggest monthly percent decline: -25.4%.
The supply of new homes on the market increased to 9.1 months, up from 8 in June. Actual inventory of single-family homes for sale, however, remained unchanged at 210,000.
"This was a particularly disappointing report since the effects of the expiration of the first-time homebuyer tax credit should have dissipated by July for this series," Barclays analysts said in a research note.