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Existing home sales cool as summer ends

WASHINGTON — Starting to cool off after a run-up during the second quarter, the broad housing market turned down in July, with sales of new and existing homes both tapering off, and only housing starts managing a gain.

Hardest hit was the highly volatile market for costly new homes, subject to big monthly swings, which tumbled 6.4 percent, to a seasonally adjusted annual level of 1.13 million units, weakening further after a 5.6 percent drop the prior month. New home sales are now at their lowest level in eight months, since dropping to 1.12 million units in December of 2003, the U.S. Commerce Department reported. Over the past two months, new home sales have fallen 11.6 percent from a 13-month high of 1.28 million units recorded during May.

The slide in new home sales was particularly noticeable in the Northeast, where sales plunged 23.5 percent, and the South, down 15.9 percent. Sales in western states fell 1.7 percent, and rose only in the Midwest, 21.5 percent.

"Some slowdown in the sales pace was inevitable following the second-quarter surge in home buying," said David Seiders, chief economist of the National Association of Home Builders. "Sales activity raced ahead after mortgage rates hit bottom in March and large numbers of fence sitters jumped into the market to beat widely anticipated mortgage rate increases. We knew some payback for that additional demand was in the cards."

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