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WASHINGTON: US existing home sales fell an unexpected 2.2 percent in August after two months of gains, industry data showed on Wednesday, signalling no end in sight to the country's worst housing slump in decades.
The National Association of Realtors (NAR) said sales of existing homes and apartments fell to a seasonally-adjusted annual rate of 4.91 million units.
The August number underperformed market expectations of a pace of 4.93 million units, and came amid a credit crisis that has prompted US finance officials to seek an emergency 700-billion-dollar bailout of financial firms.
"The difficulty in obtaining a mortgage increased over (the) past couple months, making it more challenging for creditworthy borrowers to find financing," NAR president Richard Gaylord said.
Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke on Wednesday returned to Congress Wednesday for a second day of trying to convince skeptical lawmakers to urgently pass the largest government intervention since the 1930s Great Depression.
They argue that the government purchase of toxic mortgage-related assets from financial firms will get credit flowing again and stimulate sales on the housing market, the heart of the current financial crisis.
Gaylord, a broker in California, one of the hardest-hit states in the housing slump, said there was "a serious question" about how a Wall Street bailout would help improve mortgage funding.
"Congress needs to take care of Main Street and not just bail out Wall Street," he said. "We urge Congress to restore access to sound mortgage credit so people have the ability to make and keep a long-term investment in the American dream of home ownership."
NAR said the August decline in home sales followed "a healthy gain in July as tight mortgage credit curtailed activity."
The July sales pace was upwardly revised to 5.02 million units from 5.0 million, the real-estate industry group said in a statement.
After two consecutive months of rising sales, the August decline highlighted the enduring crisis in the sector at the epicentre of a credit crisis that has rocked the US economy for more than a year.
"The headwinds of falling household wealth, tight lending standards and rising unemployment indicate that a recovery in home sales is not expected until the spring of 2009," said Gary Bigg, an analyst at Bank of America.
Patrick Newport of Global Insight agreed.
"We think that sales will drift down in the coming months as the economy slips into recession, and as lending contracts because of bank consolidation," Newport said.
On a 12-month basis, August existing-home sales fell 10.7 percent, NAR said.
The national median home price was 203,100 dollars, down 9.5 percent from August 2007.
The total number of existing homes for sale fell 7.0 percent to 4.26 million, which represents a 10.4-month supply at the current sales pace.
The glut of inventory shrank from a revised 10.9-month supply in July, NAR said.
Lawrence Yun, NAR chief economist, said that home sales will be constrained without a freer flow of credit into the mortgage market.
"The faster that happens, the sooner we'll see a broad stabilisation in home prices that in turn will help the economy recover," Yun said in the statement.
"Historically, housing has led the nation out of economic doldrums - there will not be an economic recovery without a housing recovery."
Regionally, sales edged higher in the Midwest, up 0.9 percent from July, and in the South, up 0.5 percent.
But sales of existing homes dropped 6.6 percent in the Northeast and 5.3 percent in the West. - AFP/de
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