WASHINGTON (AP) - Sales of existing homes fell 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 said Wednesday that sales fell 2.2 percent 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 is likely to persist. Inventories are being driven higher by a massive wave of mortgage foreclosures.
"We hope the downward trend in inventories continues," said Lawrence Yun, the trade group's chief economist. "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 to its core and caused the Bush administration to propose a $700 billion financial industry bailout.