16-year high for unsold homes

WASHINGTON — Inventories of unsold single-family homes in the U.S. increased 2.2 percent to 3.85 million in July, sending them in relation to sales to the highest level in 16 years, the National Association of Realtors reported Monday.

Inventories of unsold condos rose 20 percent, the real-estate group said.

The local market has seen more dramatic increases in available homes in July, according to the Northwest Multiple Listing Service. It reported that:

• In King County, 9,947 homes were for sale, a 44 percent increase from the previous July; 2,955 condos were for sale, an 80.6 percent increase.

• In Snohomish County, 5,532 homes were listed, a 51.2 percent increase; 876 condos were listed, a 112 percent increase.

• In Kitsap County, 2,427 homes were listed, a 41.5 percent increase; 287 condos were listed, a 7.9 percent increase.

Nationwide, even as more homes and condos came on the market, resales of single-family homes and condominiums fell 0.2 percent to a seasonally adjusted annual rate of 5.75 million. The results were stronger than the 5.69 million sales pace expected by economists surveyed by MarketWatch but still the slowest since November 2002.

Sales of single-family homes fell 0.4 percent to a 5.0 million seasonally adjusted pace in July, a five-year low.

Sales were down 9 percent compared with a year earlier but were essentially unchanged from June's 5.76 million pace, despite disruption in the pipeline for mortgage loans, the association said.

"These data reflect conditions prior to the financial market volatility of August," wrote John Ryding, chief U.S. economist for Bear Stearns.

In the Puget Sound area, closed sales in July for King County were down 5.7 percent from the previous year for homes and up 2.8 percent for condos.

In Snohomish County, home sales were down 21.56 percent and condo sales were up 6.96 percent year over year.

In Kitsap County, home sales were down 14.17 percent and condo sales were up 92.3 percent year over year.

Sales prices were up in all three counties for both homes and condos.

Nationwide, inventories of single-family unsold homes represented a 9.2-month supply at the July sales pace, the highest since October 1991.

For all homes — condos and single-family homes — the inventory rose 5.1 percent to a record 4.59 million, representing a 9.6-month supply. Condo inventories surged 20 percent to 742,000, an 11.9-month supply at the July sales pace.

"The inventory glut is not going away any time soon," wrote Richard Moody, chief economist for Mission Residential. Sellers need to drop prices; "desperate times call for desperate, maybe even insane, measures," Moody wrote.

Inventories typically fall in July, said Lawrence Yun, senior economist for the real-estate trade group. The figures are not seasonally adjusted.

"The inventory is very high," Yun said, adding that rising foreclosures might be increasing levels of inventories 5 to 7 percent.

But Yun also said the problems in the subprime market won't damage the broader economy.

Payment resets for subprime mortgages will cost borrowers about $30 billion, Yun said, a significant blow to those families but negligible in the $13 trillion economy.

July sales are based on closing of sales contracted in May or June. About a quarter of the Realtors surveyed said they had a client whose previously committed loan had fallen through, Yun said.

Further disruptions in the mortgage market in August should impact sales in coming months, Yun said.

The median sales price was $228,900, down 0.6 percent since last July.

By sector, July's sales of single-family homes dipped 0.4 percent to an annualized 5 million, while condominium sales rose 1.4 percent to a seasonally adjusted annual rate of 750,000.

By region, sales fell 2.2 percent in the Midwest, were unchanged in the South, rose 1 percent in the Northeast and fell 1.8 percent in the West.

Seattle Times business staff provided local information.