Existing Home Sales Fall In August After Four Months Of Growth

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After increasing in each of the four previous months, existing home sales unexpectedly fell in August, according to a report released by the National Association of Realtors on Thursday.

The report showed that existing home sales fell 2.7 percent to an annual rate of 5.10 million units in August from a 5.24 million unit rate in July. The decrease came as a surprise to economists, who had expected existing home sales to increase to a 5.35 million unit rate.

Despite the monthly decrease, NAR noted that existing home sales remain up 3.4 percent compared to a 4.93 million unit rate in August of 2008.

Lawrence Yun, NAR chief economist, said, "Home sales retrenched from a very strong improvement in July but continue to be much higher than before the stimulus."

"Some of the give-back in closed sales appears to result from rising numbers of contracts entering the system, with some fallouts and a backlog contributing to a longer closing process, but the decline demonstrates we can't take a housing rebound for granted," Yun added.

The unexpected drop in existing home sales reflected decreases in all four regions of the country, with the Midwest showing a notable 6.6 percent drop. Existing home sales in the South fell 3.1 percent, while sales in the West and Northeast fell by 2.7 percent and 2.2 percent, respectively.

At the same time, NAR noted that total housing inventories fell 10.8 percent to 3.62 million existing homes available for sale at the end of August. This represents an 8.5-month supply at the current sales pace, down from a 9.3-month supply in July.

The report also showed that the national median existing-home price for all housing types was $177,700 in August, down 12.5 percent from the same month a year ago.

While an $8,000 tax credit for first-time homebuyers has helped to boost home sales in recent months, NAR President Charles McMillan noted that the time for buyers to take advantage of the credit is running very short

"Because it's generally taking 60 days to close on a home after a contract is offered, buyers have little time to act to complete a purchase by the November 30 deadline," McMillan said. "There's no guarantee what Congress might do, so there's really no time to waste."

After increasing in each of the four previous months, existing home sales unexpectedly fell in August, according to a report released by the National Association of Realtors on Thursday. The report showed that existing home sales fell 2.7 percent to an annual rate of 5.10 million units in August from a 5.24 million unit rate in July. The decrease came as a surprise to economists, who had expected existing home sales to increase to a 5.35 million unit rate. (Market News Provided by RTTNews)