The pace of existing home sales in the United States fell for a fifth straight month in August and prices dropped from year-ago levels for the first time in 11 years, a US realtors group said.
Still, some economists said they saw signs that the housing market is beginning to stabilise.
I think the worst of the drops (in existing home sales) are probably behind us but it is way too early to say that we are at the bottom, said Mark Vitner, senior economist with Wachovia bank.
The National Association of Realtors said existing homes sales slipped to an annual rate of 6.30 million units from a 6.33 million unit pace in July.
That 0.5 per cent fall-off in volume was the smallest in the last five months of declines and was not as steep as expected on Wall Street, where economists had looked for the pace to slow to 6.18 million units.
The report, however, did show prices also have begun to drop compared to the lofty levels of last year, when many parts of the country saw home prices appreciate at double-digit annual rates.
The median price dropped to $US225,000 ($A299,980), off 1.7 per cent from August 2005.
The US existing home market had not seen a year-on-year price decline since a 0.1 per cent drop in April 1995.
The current softening of home sales and prices are good signs that the housing market can avoid a crash or hard landing, said Bill Hampel, chief economist for the Credit Union National Association.
He added, however, that the housing market is unlikely to come out of the doldrums anytime soon, saying: We are unlikely to get any real national price appreciation for the next several years.
The NAR report also found the stock of unsold homes on the market rose 1.5 per cent to 3.92 million units. At August's sales pace that represented a 7.5 months' supply, the highest since April 1993.
Kathy Lien, senior strategist at Forex Capital Markets in New York, said the most troubling aspect of the report was the drop in prices.
What was once the primary source of growth and expansion in the US is now the source of concern and nervousness, she said.
NAR chief economist David Lereah said the August slip in existing home data could be the bottom of a slump for the sector.
This price drop, in my view, has stopped the bleeding in the sales marketplace, he said. It seems that the 6.3 million level has now hit bottom. We are now flat with single-family home sales.
Prices will continue to come down in the short-term, Lereah said, and sales will remain flat. Still, he emphasised the pace of sales in August has not slipped as badly as in previous months.
That is good news for housing, he said. The health of the housing sector is in transactions, is home sales, not home prices.
Others agreed that the August data could signal an end to the long downswing in the housing sector.
The conclusion that I'm drawing is that we're very close to the bottom of the housing market, said Bernard Baumohl, executive director of The Economic Outlook Group in Princeton Junction, New Jersey. By the first quarter of next year, we'll start to see a rebound.