Home Sales Fell More Than Expected

By THE ASSOCIATED PRESS
Published: September 24, 2008

WASHINGTON — A trade group for real estate agents says sales of existing homes fell 2.2 percent in August, but the number of unsold homes on the market also dropped sharply from the previous month’s record high.

The National Association of Realtors says sales fell to a seasonally adjusted annual rate of 4.91 million units, from an upwardly revised pace of 5.02 million in July. Sales had been expected to fall by 1.6 percent, according to economists surveyed by Thomson/IFR.

There were 4.3 million unsold homes on the market, a 7 percent drop from the record set in July. It was the steepest drop in inventory since December 2006. At the current sales pace, it would take 10.4 months to sell all the properties.

Until the inventory level is reduced to more normal levels, analysts say, the housing slump will probably persist. Inventories are being driven higher by a wave of mortgage foreclosures.

“We hope the downward trend in inventories continues,” the trade group’s chief economist, Lawrence Yun, said. “Home prices will not stabilize as long as inventories remain high.”

Median prices — the point at which half of the homes sold for less and half for more — fell 9.5 percent from a year ago to $203,100, the largest price decline on records dating to 1999. Sales were 10.7 percent below last year’s levels.

The national decline in home values coupled with shaky lending standards during the real estate boom are the driving forces behind rising mortgage defaults and foreclosures. They have spurred a credit crisis that has shaken Wall Street and caused the Bush administration to propose a $700 billion financial industry bailout.

Mr. Yun said the trade group was sending a letter to Congress in support of the rescue plan. While buyers are pouncing on lower prices — especially in places like California, Florida and Nevada — sales are sluggish in formerly stable markets like the Pacific Northwest and Charlotte, N.C., he added.