NWSA News Corporation

WASHINGTON—The pace of home sales slowed sharply last month, a possible sign that rising prices are causing home buyers to pull back.

The pace of existing home sales fell 4.8% last month from July to a seasonally adjusted rate of 5.31 million, the National Association of Realtors said Monday. That was the largest month-to-month decline since January, when sales fell 4.9%. Sales for July were revised down slightly to 5.58 million from 5.59 million.

Economists surveyed by The Wall Street Journal had expected August sales would drop 1.1% to 5.53 million.

Home sales were down particularly steeply in the South, where they fell 6.6%, and in the West, where they fell 7.8%. Lawrence Yun, NAR chief economist, said those drops suggested home buyers were hurt by rising prices.

From a year ago, home sales were up 6.2%.

"Even with the decline, I believe we are comfortably set for the best home sales year in eight years," Mr. Yun said.

The median sales price in August was $228,700, which is 4.7% above the median price a year ago.

Housing has been a bright spot this summer, with measures of home builder confidence and applications for building permits rising more than expected. August housing starts, on the other hand, fell 3% from the previous month but analysts attributed the drop to the end of an affordable housing tax credit in New York rather than weakness in the market.

Buyers have been buoyed by a stronger labor market and historically low interest rates, which serve as an incentive to buy homes. Last week, the Federal Reserve said it planned to hold interest rates near zero for at least one more month, which could give the housing market more room to grow.

On Thursday, Federal Reserve Chairwoman Janet Yellen noted the improvements in the housing market although she added the market is nowhere near its prerecession levels.

"We are envisioning further improvements in the housing market," she said. "It remains very depressed."

Mr. Yun said he wasn't concerned about higher interest rates.

"Fed policy changes will haven't too big an impact on mortgage rates," he said.

Mr. Yun said he expected mortgage rates to rise to 4.1% by the end of the year and to 5.0% by the end of next year.

News Corp, owner of The Wall Street Journal, also owns Move Inc., which operates a website and mobile products for the National Association of Realtors.

Write to David Harrison at david.harrison@wsj.com and Jeffrey Sparshott at jeffrey.sparshott@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

September 21, 2015 10:35 ET (14:35 GMT)

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