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Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

Home Sales Fell By 1.3% in June; Inventories Rose

  • Summary: The National Association of Realtors ["NAR"] reported that sales of existing (as opposed to newly built) homes fell 1.3% sequentially in June and 8.9% year over year. Inventories of unsold homes rose 3.8% to 3.73 million, a 6.8 month supply at the current sales rate, the highest level since July 1997 and significantly higher than the 4.4 month supply a year earlier. The median house price rose 0.9% year over year, the slowest rate of increase since May 1995. The NAR's Chief Economist David Lereah claimed that the US housing market is heading for a soft landing, but that if the Fed continues to raise interest rates while consumers are hit by higher oil prices there could be a hard landing.
  • Comment on related stocks/ETFs: It's important to remember that the National Association of Realtors is a trade organization of realtors -- namely those who have the strongest vested interest in a healthy US housing market. In that context, Mr Lereah's comments show that even the realtors are starting to worry about the data. The rise in inventories as measured by monthly supply is particulalry worrying, because it's a lead indicator of house prices. Dont' get too excited about the relative stabilty of house prices until now; look at how the home builders are discounting new homes and how housing starts fell sharply in June.
Source: Home Inventories Rocket, Presaging Falling House Prices?