Existing-home sales slow in June

Sales of existing single-family homes fell from near-record levels in May while home prices continued to rise, according to the National Association of Realtors.

Existing-home sales dropped 11.7 percent in June to a seasonally adjusted annual rate of 5.07 million units from a level of 5.74 million units in May. June's sales activity was 4.3 percent below the 5.3-million unit pace in June 2001.

The four highest months on record were all in 2002: January, February, April and May.

David Lereah, NAR's chief economist, said a general cooling of the red-hot housing market was expected.

"After experiencing record highs during the first part of the year, existing-home sales eventually were bound to decline to more sustainable levels," Lereah said. "It's now clear that unusually mild weather in January and February contributed to exceptional home sales, in effect borrowing from sales that normally would have occurred in late spring. Even so, we still expect to set a new annual record this year.

NAR President Martin Edwards Jr. said the housing market remains healthy.

"Keep in mind that any sales activity over the 5-million mark is historically strong. We're also seeing good increases in home prices, which are rising faster than historic norms in many areas due to localized shortages of homes available for sale," Edwards said.

The national median existing-home price was $163,500 in June, up 7.4 percent from June 2001 when the median price was $152,200. Housing inventory levels at the end of June rose 1.9 percent from May to a total of 2.2 million existing homes available for sale, which represents a 5.2-month supply at the current sales pace.

"This is good news because it brings the market into closer balance between buyers and sellers, meaning there may be less pressure on home prices later this year," Lereah said.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.65 percent in June, down from 6.81 percent in May; it was 7.16 percent in June 2001.

"Mortgage rates in July dropped below 6.5 percent and will likely be the lowest monthly interest rates since Freddie Mac started keeping records in 1971. This will help to sustain the housing market going forward," Lereah said.

Regionally, home resale activity in the South declined 7.3 percent in June to an annual rate of 2.04 million units, and was 3.3 percent below June 2001. The median price of an existing home in the South was $155,100, which was 6.5 percent higher than June 2001.

Existing-home sales in the Northeast dropped 11.8 percent from May to a pace of 600,000 units in June, and were 6.3 percent lower than June 2001. The median existing-home price in the Northeast was $167,900, up 11.2 percent from a year ago.

Homes in the Midwest were reselling at an annual rate of 1.08 million units in June, 13.6 percent below May and 4.4 percent lower than June 2001. The median price in the Midwest was $137,100, up 5.5 percent from a year ago.

The existing-home sales pace in the West dropped 16.1 percent from May to an annual rate of 1.35 million units in June and was down 4.9 percent from June 2001. The median existing-home price in the West was $224,500, up 12.7 percent from the same month a year earlier.