WASHINGTON : The ailing US property market got more bad news on Tuesday as an industry report showed existing home sales fell 4.3 percent in August and the glut of unsold properties rose further. The National Association of Realtors (NAR) report indicated that credit market turmoil hurt sales, making it harder for buyers to get mortgages in many cases.
The NAR said existing-home sales fell to a seasonally adjusted rate of 5.50 million units in August from 5.75 million in July.
The figure is down 12.8 percent from a year ago, and was in line with market expectations amid troubles in the housing sector after a long period of sizzling growth.
"The unusual disruptions in the mortgage market, including a significant rise in jumbo loan rates, resulted in a fairly high number of postponed or cancelled sales, with many buyers having to search for other financing when loan commitments fell through," said NAR senior economist Lawrence Yun.
"Lower sales contributed to a build-up of unsold inventory."
One bright spot in the report was the first annual price increase in 13 months, the association said.
The national median existing-home price for all housing types was 224,500 dollars in August, up 0.2 percent from August 2006.
But the glut of unsold homes rose rose 0.4 percent at the end of August to 4.58 million, a 10.0-month supply at the current sales pace.
The NAR report noted that home sales were affected by tightened credit standards after fears of failures in the mortgage sector rocked financial markets starting in early August.
Yun said he expects similar results for home sales in September.
"Once we get through these disruptions, we'll get a better sense of where the actual market is in late fall as conditions begin to normalise," he said.
Because many mortgages are bundled into securities, they depend on investor willingness to buy these. So-called jumbo loans, over the current limit of 417,000 dollars, are not bought by the big US mortgage finance companies and are now harder to obtain.
"The housing market continues to look very weak and now it is weakening further after looking like it had hit a bit of a plateau," said Robert Brusca at FAO Economics.
Marie-Pierre Ripert, economist at IXIS Corporate and Investment Bank, said the high level of inventories "suggests that the adjustment in sales is not over and that prices will continue to decline."
A separate survey meanwhile showed US home prices falling at a faster pace in key cities.
The Standard & Poor's/Case-Shiller 20-city home price index fell 3.9 percent in the year ending in July, roughly in line with forecasts.
The 10-city index also fell 4.5 percent in the year ending July.
"The decline in home prices clearly continued into the summer months," said Robert Shiller, chief economist at MacroMarkets LLC.
"The further deceleration in prices is still apparent across the majority of regions, with 16 of the 20 metro areas showing a drop in their annual growth rate from what was reported in June."
Yet analysts noted that the reports do not reflect the half-point cut in key interest rates last week by the Federal Reserve aimed at easing stress in the credit and housing markets. The cuts are likely to lower a variety of borrowing costs but the full impact will not be felt for several months.
Separately, Lennar Corp., one of the largest US homebuilders, reported a loss of 513.9 million dollars in the quarter to August 31, wider than expected by analysts. - AFP/de
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