July's Existing Homes Sales Hit 15-Year Low

When you think of real estate bubbles bursting, you may imagine Las Vegas, California or South Florida. The Midwest was supposed to be more stable. But new data show that while the housing market never did get that high in the middle of the country, it's now dropping at a surprising rate.

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LINDA WERTHEIMER, host:

Sales of new houses fell last month to the lowest level on record. Median prices also are down to a seven-year low. The news just out from the government follows a grim report yesterday on the sales of existing houses.

As Anthony Brooks reports, the housing pain is hitting parts of the country once considered more stable.

ANTHONY BROOKS: Home sales declined by more than 27 percent last month, compared to the month before, dropping to their slowest pace in 15 years. According to the National Association of Realtors, sales were down everywhere -in the West, the South, the Northeast and the Midwest, where they dropped by 35 percent.

Professor ROBERT VAN ORDER (Real Estate, George Washington University): And it was the biggest of the four regions, so all of them were pretty bad.

BROOKS: Robert Van Order is a professor of real estate at George Washington University. He's among many experts who had expected sales to slow down after the special tax credit for first-time home buyers expired. He says the Midwest has been hit particularly hard by high unemployment, and the loss of that tax credit was just one more blow.

Prof. VAN ORDER: It looks like the Midwest maybe was a little more responsive to the credit than some other places. If you look at particular cities in the Midwest, like Minneapolis, Kansas City, some places like that, they were all pretty bad.

BROOKS: The report also shows a glut of unsold homes and foreclosed properties across the nation, which means the housing recovery is still a ways off.

Anthony Brooks, NPR News.

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