As predicted, existing-home sales fell off a cliff in July, tumbling 27.2% on a monthly basis to a seasonally adjusted pace of 3.83 million units, according to data released Tuesday by the National Association of Realtors. 

But the gloomy expectations didn't make the news any easier to take for real-estate watchers such as Jon Kolbe. "Think I'm gonna puke," Kolbe posted on his Twitter feed.

The reason for the dropoff? A weak economy and the expired tax credit, of course.

“Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired,” explained Lawrence Yun, NAR’s chief economist, who doesn’t expect any dramatic improvements in the near future. “Since May, after the deadline, contract signings have been notably lower, and a pause period for home sales is likely to last through September.”

That “pause period” is likely to be painful for the housing market and those that depend on it. According to the NAR, existing-home sales are at the lowest level since the association began collecting such information in 1999. Additionally, single-family sales, which comprise “the bulk of transactions,” haven’t been this sluggish since May 1995, when Bill Clinton was president, Internet firm Yahoo! was just two months old, and interest rates for 30-year fixed-rate mortgages stood at 7.96%, according to Freddie Mac.

(Just for comparison: Las week, Freddie Mac announced that the average interest rate for a 30-year fixed-rate home loan was a 4.42%, a record low.)

If the sales pace remains this depressed, it could take 12.5 months to burn off the 3.98 million existing homes currently for sale.

A healthier economy and job market would help those numbers tremendously. "The underlying path of housing sales is not as disastrous as July's number suggests--we are now undershooting, as sales that would have happened now were pulled forward by the tax credit," suggested Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Mass. "But a sustained upturn will depend on an improvement in the jobs market, which at the moment is slowing down rather than gathering pace."

For better or for worse, home values remain low; the national median existing-home price in July was $182,600, according to the NAR. Meanwhile, the median sales price for a new home stood at $213,400 in June, which is the most recent data available from the U.S. Census Bureau.

Distressed sales continue to be a major factor in the existing-home resale market, representing 32% of all deals, according to the NAR.

Alison Rice is senior editor, online, at BUILDER magazine.