Sales of Existing Homes Nonexistent

Sales of US existing homes fell 2.6% to an annualized rate of 4.86 million from a 4.99 million pace the prior month.  Existing home sales are down 16% year-over-year.  The median home price dropped 6.1% from June of last year to $215,100.  Sales declined in three of four regions with only the West showing an increase in sales of 1% with the median price dropping by a whopping 17%.  This is perhaps indicative of the steep markdowns going on in California as lenders try to dump properties they repossessed as the result of foreclosures.  Inventories of unsold homes rose to 4.49 million from 4.482 million in May.  This represents an 11.1 month supply at the current sales pace.  Apparently, about a third of last month's sales were foreclosed properties.  According to the perennially cheerful chief economist of the National Association of Realtors Lawrence Yun "There are signs of pent up demand."  I'm not sure where he's been looking for all of that pent up demand.  Does he have potential buyers locked in his hall closet?  If so, for the love of God, let them out!  It seems hard to believe that there is any pent up demand with sales and median home prices declining month after month.  What is more than likely happening is that the market is adjusting to reflect actual demand by people who can afford houses based on reasonable lending terms.  We will not return to the free-wheeling days of 7.25 million existing home sales per year, the peak reached in September 2005, unless every single subprime and Alt-A lender that has gone bust is resurrected and resumes lending no-doc, negative am, option arm, cash-out loans.  And that is a reality that homebuilders, mortgage lenders, and investors must face before conditions improve.  

Update:  Freddice Mac's 30 year fixed rate mortgage average was up to 6.63% from 6.26%.  That is a mighty big leap in one week, due to both rising treasury yields as well as widening spreads.  Anyone who can tell me how this will affect next month's existing home sales numbers gets a gold star.