July Home Sales Dip, but Still 3rd Highest on Record

Sales of previously owned homes declined in July but still posted their third-best sales pace on record — a sign that the housing market, while slowing a bit, remains in good shape.

The National Association of Realtors (search) reported Tuesday that sales of existing homes fell to a seasonally adjusted annual rate of 6.72 million units, representing a 2.9 percent decrease from June's record-high pace of 6.92 million units.

Even though the drop in July was steeper than the 2 percent decline some economists were forecasting, the level of sales was still considered buoyant. July's sales were running 8.6 percent higher than the pace for the same month last year.

"We're off the highs, but the levels we are at are very, very healthy," said David Lereah, the association's chief economist. He expects sales of previously owned homes to set new record highs for all of 2004.

Lereah said sales dropped because their blistering pace in June couldn't be sustained. Some economists say the sluggish job climate in July may have played a factor in the sales decline.

President Bush and his Democratic rival, John Kerry, have sparred frequently about the health of the U.S. economy and the availability of jobs. Job growth slowed dramatically in July, with payrolls expanding by a measly 32,000, the smallest gain since December.

The decrease in existing-home sales in July came despite a recent fall in mortgage rates.

The average rate on a 30-year fixed-rate mortgage was 6.06 percent in July, down from 6.29 percent in June. Still, rates in July were higher than they were a year ago.

Last week, rates on 30-year mortgages (search) dropped to 5.81 percent, part of a downward drift as economic activity slowed in the spring and early summer.

In the South, existing-home sales rose by 0.4 percent in July from June to 2.77 million units. In the Northeast, however, sales fell by 1.4 percent to 730,000. In the Midwest, sales dropped by 4.8 percent to 1.39 million and in the West, they went down by 6.6 percent to 1.83 million.

The median price of a previously owned home — where half sell for more and half sell for less — was $191,300 in July, up 8.7 percent from the same month last year.