In Jul 2010, sales of existing houses plunged by a record 27 per cent and purchases plunged to a 3.83 million annual pace, said the official data released by the National Association of Realtors (NAR) on Tuesday, Aug 24.
Along the same pessimistic lines, demand for single-family houses plummeted to a 15-year low while there was a huge surge recorded n the number of homes on the market.
These disappointing housing numbers despite the rock-bottom mortgage rates have been attributed to the lack of jobs and the high unemployment rate, which stands at 9.5 per cent.
"Housing and employment continue to be major problems for the US recovery," analyst Andrew Busch of BMO Capital Markets is quoted as saying in a news agency report.
The weak demand for homes is set to put pressure on prices.
Explaining how the economy and housing sector are closely entwined, economist Paul Dales of Capital Economics told CNN Money, "Falling housing prices strain the overall confidence in the economy and discourage Americans from spending. They also mean that banks lose money on their investments and curtail lending, meaning there is less money out there to invest and boost the economy."
This disturbing news greets US after signs of recovery from the global economic crisis emerged in mid-2009. Now, the threat of a a double-dip recession looms large.