The National Association of Realtors issued its monthly report on sales of existing houses on Wednesday, August 23 and one would think they were reviewing the DVD of "Chicken Little."

The networks didn't necessarily lead with the story but it was up there in coverage with the general tone being "Hi, ho, the housing boom is dead." Whoops, wrong movie.

On Thursday the U.S. Census Bureau in conjunction with the U.S. Department of Housing and Urban Development released their monthly summary of new house sales for July and the figures were pretty much in line with the NAR report.

As if anyone should be surprised at the news!

The nation has been waiting breathlessly for the housing bubble to burst and with interest rates up a point or more over the last year and home prices continuing to climb everyone had to know it was just a matter of time before housing became so unaffordable that something had to give.

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.

Therefore, the media funeral dirges that followed the release of the July figures seemed just a little overdone. David Lereah, NAR's chief economist, said that higher interest rates were responsible for lower sales but that the softening of prices is actually good for the housing market because it is encouraging buyers to re-enter the fray. "Now sellers in many areas of the country are pricing to reflect current market realities. As a result, there could be some lift to home sales, but it'll likely take some months for price appreciation to rise."

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.

On a regional basis, percentage sales declines and median prices were as follows:

Region Sales Volume
Sales Volume
July 2005/2006
Sales Price
Price Change
South -1.2% -7.0% $182,000 +3.2%
Northeast -5.3% -12.6% $276,000 -2.1%
Midwest -5.9%  10.1% $178,000 -0.6%
West -6.4% -18.0% $348,000 -0.6%

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.