Existing home sales slide unexpectedly
The report breaks a four-month streak of increases with a dip of 2.7% in August.
NEW YORK (CNNMoney.com) -- Existing home sales fell in August, snapping a four-month streak of increases, according to a report released Thursday.
Sales of previously-owned homes fell 2.7% last month from July, but were up 3.4% from a year ago, said the National Association of Realtors.
Sales had jumped 15.2% in the previous four months.
"This is an unpleasant surprise," said Ian Shepherdson, economist at High Frequency Economics, in a research note.
The NAR report said August home sales hit a seasonally-adjusted annual rate of 5.1 million units, down from 5.24 million in July. That's well below the analyst consensus estimate of 5.35 million annual units compiled by Briefing.com.
Shepherdson noted that the July pending sales index, which had been a good predictor of actual sales lately, pointed to sales hitting 5.4 million units or even more.
"The gap between the two numbers is not unprecedented, but we had hoped for better," he said.
The August numbers fell despite low mortgage rates, as well as home prices that have come down significantly in the past year.
"The decline demonstrates we can't take a housing rebound for granted," Lawrence Yun, NAR chief economist, in a prepared statement.
The median price of homes sold in August was just $177,700, a 12.5% year-over-year drop.
Foreclosures. The NAR report said distressed properties, which include foreclosures and short sales, are pushing down the median price because they typically sell for 15-20% less than traditional homes. Distressed property sales comprised 31% of home resales in August.
But low prices and distressed sales don't explain the sudden sales dip, said High Frequency Economics analyst Shepherdson. "[The August report] could just be noise; we await the next pending sales index with some trepidation."
NAR's Yun said the Obama administration should extend the $8,000 tax credit it made available for qualified first-time home buyers, to help boost sales. That credit is currently slated to expire on December 1.
"With an expected rise in foreclosures over the next 12 months we need to maintain a healthy level of ready buyers to absorb the inventory," Yun said in a statement.
Despite the decrease in sales, the supply of homes on the market fell significantly in August. Total housing inventory fell by 10.8% to 3.62 million existing homes for sale. That's an 8.5-month supply, down from a 9.3-month supply in July.
Where homes are selling. Regionally, the Northeast saw the smallest dip in sales, down 2.2% to an annualized rate of 910,000 homes in August. That was 5.8% higher than last year's rate. The median price of homes sold during the month was $241,100, down 10.5% from last year.
In the West, sales fell by 2.7% to a rate of 1.16 million, which was 7.4% higher year-over-year. Prices there have sunk 12.2% since 2008 to a median of $220,500.
Sales in the South were down 3.1% from July to a rate of 1.89 million. That's up 1.6% from August 2008. Since that time, home prices have dropped 11% to $157,400.
The Midwest market fared the worst last month, with existing home sales down 6.6% from July to a rate of 1.14 million, unchanged from a year ago. The median price there was $149,900, down 10.4% from last year.