WASHINGTON – Sales of previously owned homes slid in July to their lowest point in seven months as prospective buyers were put off by the slumping economy and job jitters.
On Wall Street, stock prices were pulling back a bit after Friday's big rally. By late morning the Dow Jones industrial average was down 9 points and the Nasdaq index was down 3 points.
The National Association of Realtors reported Monday that existing-home sales fell by 3 percent in July from the previous month to a seasonally adjusted annual rate of 5.17 million. That was the lowest level since a rate of 4.94 million in December.
David Lereah, the association's chief economist said the decline reflected the fact that the economy in general is deteriorating.
And, while the nation's 4.5 percent unemployment rate is low by historical standards, the flurry of layoffs seen in recent months has taken a toll. ``Psychologically, there's some impact when people are thinking about trading up and buying a house,'' he said.
Even with the drop, existing-home sales are still running at healthy levels. The housing market has been a main pillar supporting the struggling economy, in large part because mortgage rates have been low.
In July, the average rate on a 30-year fixed-rate mortgage was 7.13 percent, down from 7.16 percent in June and well below the 8.15 percent posted in July 2000. Last week, mortgage rates dipped to 6.91 percent.
Mortgage rates under 7 percent should help bolster future demand.
``This is providing opportunities for first-time buyers who are fundamental to the overall healthy of the housing market,'' said Richard Mendenhall, president of the real estate group.
In June, sales of previously owned homes slipped to a rate of 5.33 million, but that matched the fifth highest level on record, registered in December 1998.
In an effort to avert the first recession in the United States in 11 years, the Federal Reserve has slashed interest rates seven times this year, totaling 3 percentage points. The last rate cut came last week.
By region, sales fell by 8.9 percent in the West to a rate of 1.33 million in July. In the South, sales declined by 1.9 percent to a rate of 2.07 million and in the Midwest they went down by 1.8 percent to a rate of 1.12 million. But in the Northeast, sales rose by 3.2 percent to a rate of 650,000.
The drop in overall sales in July pulled prices down a bit from the previous month.
The median existing-home sales price, meaning half sold for more and half for less, dipped to $150,800 in July from $152,200. But prices were up 5.2 percent from July 2000.