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4-Month Streak of Rising Home Sales Is Over

Sales of previously owned homes fell unexpectedly last month, an industry group reported Thursday, showing that a budding recovery in the housing market remained weak.

A four-month streak of improvements in sales of existing homes gave way to a seasonally adjusted 2.7 percent dip in August, according to the National Association of Realtors, as prospective buyers of condos and single-family homes pulled back in the Northeast, the South and the Midwest.

Economists said it was too soon to say whether the drop represented a hiccup in the market or a sign of deeper problems for the housing market. Despite the monthly decline, sales in August were still 3.4 percent higher than a year earlier, when the collapse of the housing market was rapidly dragging down the economy. And they marked the second-highest sales figures of the year.

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A "sold" sign displayed outside a home in Wellesley, Mass., last month.Credit...Charles Krupa/Associated Press

“I’m not alarmed by the softening in sales,” said Celia Chen, a housing economist at Moody’s Economy.com. “The trend is still very strongly up.”

In Portland, Ore., a real estate agent, Melvin Broadous, said he was detecting signs of a thaw, especially at the low end of the market, where homes priced near $200,000 were drawing multiple bids and cash offers.

“The market is moving,” he said. “I liken it to putting popcorn in a microwave. You’re hearing it pop a little more every week.”

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Credit...The New York Times

Home sales have been edging higher over the last few months as lower prices, affordable mortgage rates and a tax credit for first-time home buyers have drawn buyers back to open houses. The average rate on a 30-year fixed-rate mortgage was 5.04 percent last week, down from 6.09 percent a year ago, the mortgage underwriter Freddie Mac reported Thursday.

Housing and real estate groups like the National Association of Realtors have called on Congress to extend or expand the tax credit for first-time buyers, saying that sales could slide back once it expires at the end of November. While the program has helped to drive sales higher this summer, some economists say its effects are waning because most interested buyers have already taken advantage of the $8,000 credit.

The Realtors’ group estimated that 30 to 40 percent of all buyers were first-time homeowners. In August, median home prices across the country fell by nearly $4,000, to $177,700, and were down 12.5 percent from a year earlier. Inventories of homes for sale fell to a supply that would take 8.5 months to burn through, the lowest levels all year.

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Credit...The New York Times

The drop in sales puzzled economists, in part because pending sales of homes had risen. Lawrence Yun, chief economist for the Realtors’ group, attributed the slide in August to an especially strong performance a month earlier.

“Some of the giveback in closed sales appears to result from rising numbers of contracts entering the system, with some fallouts and a backlog contributing to a longer closing process, but the decline demonstrates we can’t take a housing rebound for granted,” Mr. Yun said in a statement.

Other economists said the fluctuations in home sales could reflect rising unemployment across the country. About 15 million people are now out of work and economists expect the unemployment rate to hit 9.8 percent when the government reports its monthly employment figures next week.

“The job market is the biggest thing that’s going to keep sales down next year,” said Patrick Newport, an economist at IHS Global Insight. “When people can’t find a job, they don’t move. They can’t buy or sell a home.”

On Thursday, the Labor Department offered a bit of good news about the job market, reporting that first-time claims for unemployment insurance fell by 21,000 last week to a seasonally adjusted 530,000. States where jobless claims fell said there had been fewer layoffs in manufacturing, construction and service sector jobs.

A version of this article appears in print on  , Section B, Page 3 of the New York edition with the headline: 4-Month Streak of Rising Home Sales Is Over. Order Reprints | Today’s Paper | Subscribe

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