Washington – Home resales, depressed by turmoil in credit markets, fell for a sixth consecutive month in August, pushing activity to the lowest point in five years.
The National Association of Realtors said resales of single- family homes fell 4.3 percent in August, compared with July. The seasonally adjusted annual rate dropped to 5.5 million units, the slowest pace since August 2002.
The housing market has been battered by the steepest downturn in 16 years. Those problems were exacerbated in August by turmoil in credit markets, reflecting new worries about rising defaults in subprime mortgages.
The median price of an existing home – the point where half sold for more and half for less – edged up slightly in August to $224,500, an increase of 0.2 percent from August 2006. It marked the first year-over- year price increase after a record 12 straight months of declining prices.
However, many analysts believe that sales and prices will fall further as the housing market receives additional blows from rising default rates that are dumping more homes on an already glutted market and causing lenders to tighten standards.
A separate report on housing prices in 20 large cities done by Case-Shiller showed prices dropping a sharp 3.9 percent in July compared with July 2006. Economists said that report was probably a better reflection of the downward pressure on prices that is being exerted by record- high inventory levels.
“Another month of falling sales and rising inventories tells us the housing market is still a basket case,” said Joel Naroff, chief economist at Naroff Economic Advisors Inc.
Some economists warned that even worse news could be ahead because of the financial turbulence in August.
“August’s sales do not reflect the full impact of the credit crunch, which hit financial markets in midmonth,” economist Patrick Newport said.
