As reported, existing home sales decreased by 3.5% in July to an annual rate of 4.67 million, the weakest pace since November 2010. 

Summer is the home buying season, and is typically characterized by high transaction activity and price appreciation relative to the rest of the year.

Beginning in August of 2010 housing prices fell rapidly for 8 consecutive months declining by 4.4% (Case Shiller Seasonally Adjusted 20 City Price Index).  This year it appears that the long seasonal slump will begin a month early as July’s weak transaction level will likely translate into price declines.

In May 2011 (the last month for which Case Shiller data is available) the national price index was near a post-Stimulus low at 141.0.  Off of this low, prices are now poised to fall for up to 9 consecutive months until the Spring thaw yields an uptick in demand. 





The Federal Government has postponed a resolution to the Housing Depression by propping up asset prices and preventing the market from clearing.  Concocted demand has created an incremental two year’s worth of home transactions which are sinking rapidly underwater.  Instead of stabilizing the housing market, buyers who paid overvalued prices, courtesy of Federal subsidies, will contribute a new source of foreclosures to the backload of distressed properties resulting from the Housing Bubble, further extending The Affordable Mortgage Depression.