Home Sales in 'Free Fall'

In another indication of troubled times in the housing market, a report yesterday showed that sales of existing homes fell in August for the sixth consecutive month.

The National Association of Realtors reported that sales of existing single-family houses, townhouses, condominiums and co-ops declined 4.3 percent in August from July, to a seasonally adjusted rate of 5.5 million units. Sales were down 12.8 percent from August 2006.

Lawrence Yun, a senior economist at the association, said problems in the mortgage industry contributed significantly to the drop in sales to their lowest level in five years.

The decline came as no surprise to outside analysts.

"The housing market is in a free fall," said Mark Zandi, chief economist of Moody's Economy.com. "The subprime financial shock is resulting in a credit crunch, which is undermining housing demand."

The Realtors association said the existing housing inventory for sale rose 0.4 percent in August, to 4.58 million. That represents a 10-month supply at the current sales pace, about twice what some analysts consider healthy.

"Inventory is off the charts," said Michael D. Larson, a real estate analyst with Weiss Research of Jupiter, Fla. He said sellers' resistance to lowering prices to reflect market value was contributing to the glut of houses for sale.

"Sellers are just being unrealistic," he said. "Sellers aren't pricing for today's market."

The national median price of existing homes sold in August increased to $224,500, up 0.2 percent from a year earlier, the first increase in 12 months. The median is the point at which half the homes sold for more and half sold for less.

"I would not read too much into a single month of data," Yun said.