Sales of existing US homes dropped 1.7 percent in November while the stock of unsold homes on the market climbed to a 19-year high, the National Association of Realtors said. Admitting a slowdown is now under way, the industry group said existing home sales dropped to a seasonally adjusted annual rate of 6.97 million last month, the lowest since March.
"Housing activity has peaked," said David Lereah, chief economist for the association. But he insisted the market will not implode after years of red-hot growth. "There are no balloons popping."
Inventories of unsold homes increased 1.2 percent to 2.9 million, the most since April 1986.
The strength of the US housing market is credited by economists with sustaining consumer spending over recent years, helping the economy to expand by a robust 4.1 percent in the third quarter.
"The cooling US housing sector should apply a dampener to consumer spending as 2005-2006 unfolds, but some of this could be offset by still-decent job growth," said Sherry Cooper, chief economist for BMO Nesbitt Burns.
Lereah said home sales in 2005 would likely set a record of about 7.104 million and would slow only moderately in 2006 to 6.84 million.
Signs of froth in the market persist. The median sales price for a US home rose 13.2 percent year-over-year in November to 215,000 dollars.
"Double-digit annual increases will become less common in the coming year," NAR president Thomas Stevens said.
