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Existing Home Prices Drop In August

First Year-to-Year Decline Since 1995

September 26, 2006

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There's good news for prospective home buyers in the latest existing home sales figures from the National Association of Realtors. In August, the median sale price for all existing houses fell 1.7 percent to $225,000, the first year-over-year decline since 1995.

Economists seized on the figures as more evidence the housing boom has ended.

While the number of sales nationwide was higher than expected, the median price dropped faster than many predicted. The real estate industry, meanwhile, put the best possible spin on the report.

"This is the price correction we've been expecting -- with sales stabilizing, we should go back to positive price growth early next year," said David Lereah, the NAR's chief economist.

But others are not so sure. One housing industry analyst said the speed of housing's price collapse has been "astonishing" and suggested both prices and sales volumes have more ground to lose.

The Western U.S. was the only region to report an increase in August's median sale price, as the median sale price inched up to $345,000.

The median sales price in the Northeast fell 3.9 percent to $271,000 on a 1.9% sales increase. The Midwest posted a 1.1 percent decline in the median sales price to $176,000 but a 0.7 percent sales increase. In the South, the median sales price dropped 2.6 percent and sales slipped 0.8 percent.

Meanwhile, home shoppers also have more homes to choose from. The NAR says the decline in the sales rate has contributed to an increasing number of unsold existing homes, which totaled 3.92 million units in August. That's the largest supply since April 1993, according to the NAR.

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