The pace of existing home sales fell sharply in August to a 5.5 million-unit annual rate while single-family home inventories swelled to an 18-year high, the National Association of Realtors said on Tuesday.
Total existing home sales, which include condominiums, fell 4.3 percent in August from the 5.75 million adjusted annual rate in July. August's sales pace was the lowest since 5.36 million units in August 2002.
The inventory of homes and condos for sale rose 0.4 percent to 4.58 million units at the end of August, a record 10 months of supply. The NAR began combining condo and single-family homes inventories in January 1999, and prior to that the record inventory for single-family homes was 9.8 months of supply in May 1989.
Economists polled by Reuters were expecting home resales to fall to a 5.49 million-unit pace from the 5.75 million-unit rate initially reported for July.
Tighter credit standards are weighing on home demand as more potential buyers are turned away by lenders, said NAR chief economist Lawrence Yun.
"The credit market freeze in August has no doubt contributed to slower sales," said Yun, who noted that as many as one in 10 home sales fail to close in many markets because buyers are unable to get financing. In some markets, Yun said, the home buying "fallout rate" is closer to 30 percent.
While inventories remain high, Yun said August saw the lowest rate of new listings for that month in seven years.