Evidence grows that housing boom is over

WASHINGTON — The nation’s once-booming housing market slumped even further in the spring with sales declining in 28 states, led by big drops in the formerly red-hot areas of Arizona, Florida and California.

Sales of existing homes fell nationwide to a seasonally adjusted annual rate of 6.693 million units in the April-June quarter, down by 7.5 percent from the record rate of 7.193 million units in the spring of 2005, the National Association of Realtors reported Tuesday.

And in further evidence that the boom is over for housing, the National Association of Home Builders said its monthly survey of builder sentiment fell to its lowest level in more than 15 years.

The decline, which pushed the index down seven points to 32, was blamed on rising unease among home builders about record levels of unsold new and existing homes and increased cancellations of contracts for new homes. It marked the seventh consecutive drop.

The slowdown is occurring after a lengthy boom in which sales of both new and existing homes set records for five straight years as buyers flocked into the market, lured by the lowest mortgage rates in more than four decades.

But mortgage rates have been climbing for most of this year, reflecting a two-year campaign by the Federal Reserve to push interest rates higher as a way of slowing the economy and keeping inflation under control.

The Fed last week refrained from raising rates for an 18th time, spurring hope that the rate hikes will end before they do more damage to interest-rate sensitive sectors of the economy such as housing.

The Realtors survey showed that sales fell in 28 states and the District of Columbia in the spring, compared to the same period a year ago. By comparison, sales were down in just five states and the District of Columbia in the spring of 2005.

The biggest sales declines this spring occurred in states that had the hottest markets last year. Sales fell 26.9 percent in Arizona, 26.7 percent in Florida, 25.3 percent in California, 23.9 percent in Virginia and 23.5 percent in Nevada.