Sales of existing homes fell locally and nationally in July from July 2007, although a month-to-month bump-up resulting from booming foreclosure sales in the West gave housing-industry officials some cause for optimism.
By comparison, foreclosure sales in this area are minuscule and have had little effect on sales and prices.
In the eight-county Philadelphia area, sales declined 22.6 percent in July from July 2007. The average price dropped 2.5 percent, to $234,000 from $240,000, according to Prudential Fox & Roach HomExpert Report, based on Trend Multiple Listing Service data.
Nationally, median prices tumbled 7.1 percent from July 2007, to $212,400 from $228,600, the National Association of Realtors said yesterday.
Month-to-month sales in the Philadelphia metropolitan area were 9 percent lower. By contrast, sales nationally rose 3.1 percent in July from June.
"While the bounce in July existing sales is a welcome improvement, the housing market still suffers from high inventories," said economist Brian Bethune of Global Insight Inc., of Lexington, Mass.
The chief reason for this "bounce": Foreclosure sales and resulting huge drops in median prices.
Almost 21,000 houses were sold in the six counties of Southern California in July, according to MDA DataQuick, a subsidiary of MacDonald, Dettwiler & Associates Ltd., of Vancouver, British Columbia, helping to boost national numbers.
Of those 21,000 sales, however, 43.6 percent, or 9,156 houses, were foreclosed properties. The median sale price for those six counties fell 31.1 percent year-over-year in July. Foreclosure sales in one of those counties - Orange - accounted for more than 64 percent of transactions.
According to First American CoreLogic Inc., which tracks sales nationwide, the Philadelphia area's foreclosure rate for June - the latest month for which there are numbers - was 1.1 percent.
"This has been the story of the region for the last two decades," said Joel L. Naroff, chief economist for Commerce Bancorp Inc. "We manage not to participate in the hot markets and industries that cause national activity to surge and, as a consequence, we don't fall apart as much as the previously hot areas."
Pennsylvania has escaped the worst of the epidemic so far, said Rick Sharga, chief economist at RealtyTrac Inc., of Irvine, Calif., which follows foreclosures nationally.
Pennsylvania "didn't experience the ludicrous home-value inflation" that California, Arizona and other states did, he said. The places that saw the "most extreme overvaluation of homes are the areas suffering the most in the current foreclosure cycle."
Overvaluation at the top of the boom in 2006 is at the core of most of the problems in the housing market today. Buyers in overvalued areas were forced to turn to risky loans for financing.
Pennsylvania, "which saw home prices increase at somewhat more reasonable levels, didn't have as high an incidence of consumers buying too much house with risky loans," Sharga said.
In addition, July's median sale price of $234,000 is just $1,000 lower than that in July 2006. Generally, "more and more, it appears that the existing-home market [nationally] has bottomed, even if the large number of homes on the market means prices may continue to fall," Naroff said.
The first stage of recovery in the housing market has been reached as home sales look to have stabilized, Naroff said.
Area Existing-Home Sales
Bucks 743 576 -22.5 pct.
Burlington 555 411 -25.9 pct.
Camden 585 461 -21.2 pct.
Chester 588 546 -7.1 pct.
Delaware 760 499 -34.3 pct.
Gloucester 278 234 -15.8 pct.
Montgomery 1,116 824 -26.2 pct.
Philadelphia 1,598 1,263 -21.0 pct.
Eight-county 6,223 4,814 -22.6 pct.
SOURCE: Prudential Fox & Roach HomExpert Report