Home Sales on decline in U.S.

The National Association of Realtors of US reported on Wednesday that sales of previously owned homes dropped to the lowest level in July since January 2004. The inventory of unsold homes climbed to a new record high also confirming that the housing market bloom is on a downtrend in the United States.

Total sales of existing homes fell 4.1 percent last month, the lowest since two and a half years. The drop to 6.3 million homes in July from 6.6 million in June was a fourth consecutive monthly fall and the slowest since early 2003. The July 2006 pace was 11.2 percent below the July 2005 pace of 7.13 million.

In tandem the housing inventory reached a new record height, the highest since April 1993. The supply of unsold homes rose to 3.86 million amounting to 3.2% rise and approximately to a 7.3-month supply.

The sales of the existing homes saw a collective downtrend in all four regions of the country, but the rate of slump varied from region to region. West registered the steepest fall.

Region wise, Northeast reported a drop by 5.4 percent in the sales. They were off by 5.9 percent in the Midwest and 1.2 percent in the South. Sales declined by 6.4. West experienced the biggest decline of 6.4%.

High mortgage rates, rising energy prices and a slowing economy are the reasons cited for such a slowdown in the housing sector. Since the housing sector is central to the overall health of the nation’s economy analysts are concerned that a decline in home sales may help push the economy into a recession. Cause of Concern and food for though for the Federal Bank.