WASHINGTON – The pace of existing home sales in the United States fell for a fifth straight month in August and prices dropped from year-ago levels for the first time in more than 10 years, a realtors group said Monday.
The National Association of Realtors said existing homes sales slipped to an annual rate of 6.30 million units from a 6.33 million unit pace in July.
While the report offered a fresh sign of cooling in the U.S. housing market, the sales drop was not as steep as expected on Wall Street, where economists had looked for the pace to slow to 6.18 million units.
The report, however, did show prices have begun to drop when compared to the lofty levels of last year. The median price dropped to $225,000, off 1.7 percent from August 2005.
In addition, the stock of unsold homes on the market rose 1.5 percent to 3.92 million units. At August's sales pace that represented a 7.5 months' supply, the highest since April 1993.
Kathy Lien, senior strategist at Forex Capital Markets in New York, said the most troubling aspect of the report was the drop in prices.
"What was once the primary source of growth and expansion in the U.S. is now the source of concern and nervousness," she said.
NAR chief economist David Lereah, however, said the August slip in existing home sales data could be the bottom of a slump for the sector.
"This price drop, in my view, has stopped the bleeding in the sales marketplace," he said. "It seems that the 6.3 million level has now hit bottom. We are now flat with single-family home sales."
Prices will continue to come down in the short-term, Lereah said, and sales will remain flat. Still, he emphasized that the pace of sales in August has not slipped as badly as in previous months.
"That is good news for housing," he said. "The health of the housing sector is in transactions, is home sales, not home prices."
Others agreed the August data could signal an end to the downswing in the housing sector.
"The conclusion that I'm drawing is that we're very close to the bottom of the housing market," said Bernard Baumohl, executive director of The Economic Outlook Group in Princeton Junction, New Jersey. "By the first quarter of next year, we'll start to see a rebound."