Sales of existing homes in the United States fell in August, with home prices suffering a record drop, although the number of unsold homes on the market declined sharply from July's record high. The National Association of Realtors (NAR) said Wednesday that sales fell 2.2 percent to an annual rate of 4.91 million units. Sales had been expected to fall 1.6 percent. Meanwhile, median home prices fell a record 9.5 percent in August. There were 4.3 million unsold homes on the market, a 7 percent decline from the record set in July. It was the steepest drop in home inventory since late 2006. At the current sales pace, it would take 10.4 months to sell all the properties. Until the inventory level is reduced to more normal levels, the housing slump is likely to continue, analysts say. Inventories are being driven higher by a huge wave of mortgage foreclosures. “We hope the downward trend in inventories continues,” NAR chief economist Lawrence Yun said. “Home prices will not stabilize as long as inventories remain high.” The country's decline in home values, in addition to lax lending standards during the real-estate boom, are the driving forces behind rising mortgage defaults and foreclosures. They have sparked a credit crisis that has shaken Wall Street and caused the Bush administration to propose a $700 billion plan to rescue the financial sector. Yun said NAR is sending a letter to Congress in support of the rescue plan.
