UPDATE 1-U.S. July existing home sales fell 4.1 pct
Wed Aug 23, 2006 11:11 AM ET
(Adds details, economist comments)
By David Lawder
WASHINGTON, Aug 23 (Reuters) - The pace of existing home sales in the
United States fell a sharper-than-expected 4.1 percent in July to their
lowest level since January 2004 as the downturn in the U.S. housing
sector accelerated, the National Association of Realtors said on
Wednesday.
Sales of existing U.S. homes fell for a fourth consecutive month to a
seasonally adjusted annual rate of 6.33 million units in July from a
downwardly revised 6.60 million unit pace in June. The July pace was
11.2 percent below the July 2005 pace of 7.13 million.
Analysts had expected home resales to slow to a 6.55 million unit pace
from June's originally reported rate of 6.62 million units.
The national median existing home price for all housing types was
$230,000 in July, up 0.9 percent from the July 2005, in the slowest
year-on-year price gain since May 1995.
The supply of homes for sale at the end of July jumped sharply by 3.2
percent to 3.86 million units. This represented a 7.3 months' supply,
the highest since April 1993.
Economists were caught off guard by the severity of the drop and said
the slowdown in sales activity and the associated wealth effect on
consumers could drag down the overall economy.
"This is another step down on the staircase, and we have a number of
steps to go. I'd still use the word orderly, but we keep descending,"
said Stuart Hoffman, chief economist at PNC Financial Services Group in
Pittsburgh.
He said the number could influence the Fed's future interest rate
decisions because it will be a drag on economic growth.
NAR Chief Economist David Lereah said the increase in the supply of
available homes so far this year was the sharpest on record.
"What we are experiencing right now is an inventory and price
adjustment," Lereah said. The housing market is in transition, he said,
"and there is pain in that transition."
Lereah said the slowdown represented both cooling of overheated
high-priced markets and sales declines in some markets that were
struggling with a slowing economy, such as Midwest manufacturing cities.
Existing home sales in West dropped 6.4 percent to an annual pace of
1.32 million in July and were down 18.0 percent from a year earlier.
The July median price in the West fell 0.3 percent from a year ago to
$348,000.
In the Midwest, they fell 5.9 percent to a 1.43 million unit pace, as
the median price fell 0.6 to $178,000. Sales in the Northeast fell 5.4
percent to an annual sales pace of 1.05 million units as the median
price fell 2.1 percent from July 2005.
Sales in the South slipped just 1.2 percent to a pace of 2.53 million
units, while the median price rose 3.2 percent $192,000.
Single-family home sales dropped 5 percent to a seasonally adjusted
annual rate of 5.51 million in July from 5.8 million in June. The
median existing single-family home price was $231,200, up 1.5 percent
from a year earlier.
Existing condominium sales, however, rose 2.8 percent to a seasonally
adjusted annual rate of 818,000 units from 796,000 in June. The median
condo price was $225,600 in July, down 1 percent from a year earlier.
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