Existing home sales fall for fifth month in August

WASHINGTON — Sales of existing homes fell for the fifth consecutive month in August as the once-booming housing market slowed further.

The National Association of Realtors reported Monday that existing home sales slipped by 0.5 percent to a seasonally adjusted annual rate of 6.30 million units.

The slowdown in sales was weighing on home prices, with the median price of an existing home sold in August dropping to $225,000, 1.7 percent below August 2005. It marked the first year-over-year price decline in more than 11 years.

The weakness in existing home sales followed a report last week that construction of new homes and apartments plunged by 6 percent in August, pushing building activity to the lowest level since early 2003.

The housing sector, which had enjoyed five boom years of record sales, has been slowing sharply this year under the impact of rising mortgage rates and a slowing economy.

David Lereah, the Realtors' chief economist, said the drop in prices had been expected, indicating that sellers are finally starting to lower their asking prices in the face of weaker sales and soaring inventories.

The inventory of unsold homes rose 1.5 percent to an all-time high of 3.92 million units. At the August sales pace, it would take 7.5 months to sell the backlog of unsold homes, representing the longest period since April 1993.

Lereah predicted that prices would likely keep declining for the rest of the year.

"We do expect an adjustment in home prices to last several months as we work through a buildup in the inventory," he said. "With sales stabilizing, we should go back to positive price growth early next year."

Sales of single-family homes were unchanged at an annual rate of 5.51 million units in August, the same as July. But this sales pace was 12.3 percent lower than a year ago. Sales of condominiums fell 3.5 percent to an annual rate of 793,000 units, which represented a 14.5 percent drop from the condo sales pace in August 2005.

By region of the country, sales of existing homes rose 1.9 percent in the Northeast to a seasonally adjusted annual rate of 1.07 million units in August. The median price for a home sold in the Northeast was $271,000, down 3.9 percent from August 2005.

Existing home sales in the Midwest rose 0.7 percent to an annual rate of 1.44 million units with the median price dropping to $176,000, 1.1 percent below a year ago.

Sales in the South fell by 0.8 percent to an annual rate of 2.51 million units with the median price falling to $184,000, down 2.6 percent from a year ago.

Sales in the West fell by 2.3 percent in August to an annual rate of 1.29 million units with the median price dropping to $345,000, up 0.3 percent from a year ago.