Existing-Home Sales Drop 1.3%
As Inventories Rise Sharply

Sales of existing homes in the U.S. decreased in June for the eighth time in the past 10 months, the National Association of Realtors said in a further sign that the housing market has slowed dramatically.

Home resales fell to a 6.62 million annual rate, a 1.3% decline from May's revised 6.71 million annual pace. May resales were originally seen at 6.67 million. NAR chief economist David Lereah said the housing market is flattening out.

The level of resales in June was above Wall Street expectations. Analysts predicted a 6.60 million rate of sales of previously owned homes. The average 30-year rate was 6.68% in June, up from 6.60% in May, according to Freddie Mac.

"Over the last three months home sales have held in a narrow range, easing to a level that is near our annual projection, which tells us that the market is stabilizing," Mr. Lereah said.

The median home price increased to $231,000, compared with a revised $229,000 in May. That was up 0.9% from June 2005 and represented the smallest year-over-year price gain since May 1995.

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.

Existing-home sales were mixed in the four regions of the U.S. Demand fell 2.3% in the South and 3.5% in the Northeast. Sales were flat in the Midwest and in the west.

Mr. Lereah 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.

Mr. 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, Mr. Lereah said.

-- The Associated Press contributed to this article.

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