WASHINGTON — Sales of U.S. existing homes fell 3% last month, a real estate trade group said Monday, as the slowing economy reduced demand for homes.
The National Assn. of Realtors said sales of previously owned homes fell in July from the prior month to a seasonally adjusted annual rate of 5.17 million units.
In California, sales of existing homes fell 4.5% from June to a seasonally adjusted rate of 503,030 homes, but sales were up 6% from a year earlier and the median price reached a record, according to the California Assn. of Realtors.
Nationally, the sales rate was up 7.3% from July 2000 but missed analysts' expectations for a pace of 5.29 million units a year. Homes sales fell by 0.6% in June.
Analysts cautioned, however, that despite the decline in home sales in the last two months, the strength of the housing sector remains impressive. July's figure was not that far below a record annual rate of 5.45 million units marked in June 1999.
"The overall economy is weak, it's very, very weak right now, and that will continue to reduce modestly the demand for homes going forward," said David Lereah, chief economist for the National Assn. of Realtors.
"Although home sales dropped by 3%, the 5.17 million sales level is very healthy and reflects a healthy home sales market," he said.
Homes were sold at near-record monthly levels for many months of the first half of this year, and the cooling off represents an anticipated slowdown, Lereah said.
"This number is quite volatile month to month so I would read no particular significance into the 3% decline," said David Orr, chief economist for First Union Corp. in Charlotte, N.C.
Long-term observers of the housing markets consider sales rates above 5 million units to be exceptional, he added.
The California association's report said the median price of a home in the state was $267,810, a 0.3% increase from June and up 10.6% from a year earlier, Bloomberg News reported.
"The underlying strength of the market lies in the more affordable regions of the state, particularly in the low- and mid-price range," said California Assn. of Realtors President Gary Thomas.
Nationally, the median sales price of an existing single-family home dropped to $150,800 from the record price of $152,200 seen in June. The median price was 5.2% above a year ago.
The supply of houses available for sale was 4.8 months' worth in July, according to new methodology used by the National Assn. of Realtors. According to the new method of calculating inventory, the supply level fell from 4.9 months' worth in June, meaning there were fewer houses available for sale.
Regionally, the West saw the biggest decline in existing-home sales in July with an 8.9% drop. Sales fell 1.9% in the South and were down 1.8% in the Midwest, but rose 3.2% in the Northeast.