Existing home sales plummet in June

WASHINGTON — With consumers made anxious by a string of corporate scandals and a tumbling stock market, the U.S. housing market suffered a setback in June, with two key components, sales of existing homes and housing starts, both falling off despite persistently low interest rates.

Sales of existing homes — the largest sector of the housing market, accounting for more than two-thirds of all activity — sloughed off at a double-digit pace, declining by 11.7 percent from near-record levels last month, to a seasonally adjusted 5.1 million units, a decline of 670,000 units on an annualized basis, the U.S. Department of Commerce reported.

And a key gauge of future activity, housing starts, slipped by 3.6 percent, to a seasonally adjusted level of 1.7 million units.

The only indicator pointing north was the highly volatile market for new home sales, subject to frequent wide swings, which edged up by 0.5 percent, to an annualized level of slightly more than one million homes. David Lereah, chief economist of the National Association of Realtors, said a general cooling of the red-hot housing market was not unexpected. "After experiencing record highs during the first part of the year, existing-home sales eventually were bound to decline to more sustainable levels. It's now clear that unusual mild weather in January and February contributed to exceptional home sales, in effect borrowing from sales that normally would have occurred in late spring. Even so, we expect to set a new annual record this year."