There is a self-fulfilling prophecy at work here as well. As books, newspapers, and television commentators have nattered on about "the bubble" potential buyers have, according to anecdotal data, pulled back a bit, waiting to see if prices decline as sales cool. Unscientific reports also indicate that anxious sellers are dropping prices and scrambling to make their homes more "saleable" while builders are offering concessions on new homes ranging from parking a free car or pick-up in the three car garage to quality upgrades to covering closing costs. It is difficult to measure this kind of information, but here is the latest hard data.

According to the NAR report, existing home sales including single-family houses, townhouses, condos, and co-ops were down 4.1 percent on a seasonally adjusted basis to an annual rate of 6.33 million units in July from the revised rate in June of 6.60 million. The monthly rate fell 11.2 percent from the July, 2005 sales rate of 7.13 million.

This followed the NAR report issued on August 15 that reported that sales for the 2nd quarter of 2006 (April-June) were down 7.0 percent from a record-setting level of 7.19 million sales in the second quarter of 2005.

Still, prices were up a bit. The national median price for an existing home regardless of type was $230,000 last month, up 0.9 percent from one year earlier although the price of condominiums and co-ops, while up 2.8 percent to a seasonally adjusted annual rate of 818,000 units from 796,000 in June were still 10.5 percent lower than the 914,000 sold in July of last year. Condo prices were also down 1 percent from a year ago; the median price was $225,000.

It was housing inventories that seemed to set off alarm bells in the media. At the end of July there were 3.86 million existing homes on the market. This is a 7.1 month supply at the current absorption rate. In June the inventory was at 6.1 months. Single-family home sales were down 5.0 percent from June and 11.4 percent below sales one year ago. Still the existing single family home price of $231,200 was 1.5 percent higher than one year ago.

Statistics on sales of new single family houses as released by Census/HUD were similar. In July never-before occupied dwellings sold at a seasonally adjusted rate of 1,072,000 units, a decline of 4.2 percent from the revised June rate of 1,120,000. This is, however, 21.6 percent fewer homes than the July 2005 estimate of 1,367,000.

The median sales price of new houses sold in July was $230,000 compared to $233,800 last month and $229,200 in July 2005 (averages were $293,500, $289,300 and an identical $289,300 in July, 2005.) At the end of last month there were 568,000 new homes for sale in the United States, a supply of 6.5 months at the current sales rate. Still, the report showed that the median time a house sold in July had been on the market was 3.8 months. This was actually a lower market figure than seen during most of the year and only slightly longer to the figure of 3.7 months one year ago.

On a regional basis it was the Midwest that showed the greatest decline in new home sales - a drop of 21.3 percent since June and 35.4 percent since July of 2005. Sales in the Northeast which took a big hit earlier in the year and are down nearly 43 percent since July 2005, were down only 1.8 percent June/July as builders have apparently made adjustments to the new reality.

Edwina  Baniqued