The pace of sales of pre-owned US homes fell slightly in July but the inventory of unsold properties soared to the highest level in over 15 years as troubles in the subprime mortgage market continued to wreak havoc on the housing sector. Home sales slid 0.2 percent in July to a seasonally adjusted 5.75 million unit annual rate, according to the National Association of Realtors.
That brought the supply of unsold homes at the current sales pace to 9.6 months' worth, the highest level on record since 1999, when the association began tracking all types of properties, such as condominiums, together with single-family homes.
The supply of single-family homes, the bulk of the inventory included in the association's data, rose to 9.2 months' worth, which was the biggest supply on hand for sale since October 1991.
"This shows that the housing downturn continues to intensify. It shows no sign of abating. Given the turmoil in the financial market from lending problems, the housing problem will continue in the months ahead," said Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pennsylvania.
Worries over the housing market coupled with high energy costs have eroded investor confidence, with the UBS/Gallup Index of investor confidence falling for the third straight month, bringing it down to the lowest reading in a year.
This sentiment also held true for a panel of key business economists who in a survey released on Monday concluded that the risk of massive defaults on subprime mortgages and heavy debts is a bigger threat to US economic prosperity than terrorism.
"The combined threat of subprime loan defaults and excessive indebtedness has supplanted terrorism and the Middle East as the biggest short-term threat to the US economy," the National Association for Business Economics said.
That panel's conclusion was based on a survey of 258 NABE members conducted between July 24 and August 14. In that survey, only 20 percent of members said terrorism was now their top concern, compared with 35 percent surveyed in March.
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