FSBOBOLINKS: New Signs of Cooling in Housing

FSBOBOLINKS: New Signs of Cooling in Housing


he housing market is deteriorating by the month.

In the latest and strongest indication that the home buying and selling frenzy is over, the National Association of Realtors reported yesterday that sales of previously owned homes fell to the lowest level in July in more than two years, prices flattened and sellers waited longer and longer to find buyers for their homes. The supply of unsold houses on the market hit a record high.

Economists said the data showed the housing market was following the traditional path of a slowdown: a drop in sales followed by a decline or a plateau in prices. But they remained divided over just how severe and long-lasting the coming slump was likely to be.

“It does feel a little scary right now,” said Celia Chen, director of housing economics at Moody’s Economy.com. “I think these markets will correct. The price gains that they have seen have exceeded what can be supported by the economic and demographic fundamentals.’’

Existing-home sales in July declined 4.1 percent from the previous month to a seasonally adjusted annual rate of 6.3 million, the slowest selling pace since early 2004, when sales were running at a rate as low as 6 million.

“We had a hot market, and now it’s going to be back to normal,” said Edward Leamer, an economist at the University of California, Los Angeles. “Sales volumes will continue to decline, although they’ll bottom out sometime in the next year.”

The median selling price for existing homes, which rose at double-digit rates for much of the previous two years, was up only slightly last month. And had home prices not continued to rise in the South, where they gained slightly more than 3 percent compared with a year earlier, the national rate would have fallen.