The expiring tax credit caused a burst of homebuying activity, says the AP, but the effect is likely to be short-lived.

Prices are widely expected to fall in the second half of the year. Sales of previously occupied homes plunged in July to the lowest level in 15 years, despite the lowest mortgage rates in decades and bargain prices in many areas.

Unsold homes are sitting on the market, forcing sellers to lower their prices. If the homes still don’t sell, they can be forced to back out of purchasing a new home and the market stalls.

The article says that with the current inventory of unsold homes it would take more than a year to sell them all. In a healthy economy we should have enough for approximately 6 months.

Home prices rise in 17 cities in June [AP]

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