WASHINGTON – Sales of existing homes fell in June for the eighth time in the past 10 months while home prices edged up at the slowest pace in more than a decade — more signs that the housing market has slowed dramatically.
The National Association of Realtors reported Tuesday that sales of previously owned homes and condominiums dropped 1.3 percent in June to a seasonally adjusted annual rate of 6.62 million units.
The median price of a home sold last month was $231,000. That was up 0.9 percent from June 2005 and represented the smallest year-over-year price gain since May 1995.
The 1.3 percent decline, which was in line with expectations, represented the third drop in a row and the eighth in the past 10 months as the nation's once-booming housing market has shifted to a slower pace in the face of rising mortgage rates.
By region of the country, sales fell 3.5 percent in the Northeast and 2.3 percent in the South last month. Sales were unchanged in the West and the Midwest.
The inventory of unsold homes rose to a new record of 3.725 million units, which is a 6.8 months supply at the June sales pace.
Analysts believe that the growing level of unsold homes will further depress prices in coming months.
David Lereah, chief economist for the Realtors, said he believed that the decline in housing sales was beginning to level out. Sales of both new and existing homes set records for five consecutive years, but economists believe sales this year will post a decline, reflecting mortgage rates that have risen to the highest levels in more than four years.
The big worry is that sales will fall so sharply that it could send shockwaves through the entire economy, much as the bursting of the stock market bubble in 2000 contributed to the 2001 recession.
Economists expect the decline in the economy to contribute to a slowdown in growth but not result in an outright recession.
Lereah said he believed price weakness will continue as sellers start cutting their asking prices in the face of weaker demand and rising inventories.
He said that housing continued to be a "tale of two markets" with previously hot areas experiencing declines and more modestly priced areas showing a boom.
Lereah said that while New York City, Boston, Chicago and Minneapolis had seen sales declines, cities such as Syracuse and Pittsburgh were experiencing rising sales.
By state, Maryland and Virginia were experiencing weakness while Texas, Georgia, North Carolina and Tennessee were enjoying sales increases, Lereah said.