Sales of existing homes in the United States fell for a fifth straight month in July, dropping to the slowest pace in nearly five years, while home prices fell for a record twelfth consecutive month. The National Association of Realtors reported that sales of existing homes dipped by 0.2 percent last month to a seasonally adjusted annual rate of 5.75 million units. The median price of a home sold last month fell to $230,200, down by 0.6 percent from the median price a year ago. The housing slump, combined with recent severe turmoil in financial markets, has raised worries about a possible recession. But many economists believe the Federal Reserve will forestall that possibility by reducing a key short-term interest rate if financial market conditions fail to stabilize. The 0.2 percent drop in July sales, compared with activity in June, marked the fifth straight monthly decline and left sales 9 percent below the level of a year ago. The sales pace was the slowest since November 2002. Sales fell by 2.2 percent in the Midwest and were unchanged in the South. Sales rose by 1.8 percent in the West and 1 percent in the Northeast. The increase in the Northeast, which also saw the median home price increase, was seen as possibly hopeful sign that the worst of the housing downturn may be ending. But many analysts believe it could be months before housing stabilizes because of the threat that rising delinquencies caused by subprime mortgage loans could result in repossessed homes being added to an already overloaded market. The inventory of unsold homes rose by 5.1 percent at the end of July to a record of 4.59 million units.
