Home sales drop 5.4 percent, fewest since October

Home sold in Los Angeles, California on April 24, 2012.
CBS News

(CBS/AP) WASHINGTON - Americans bought fewer homes in June than May, suggesting the weak economy could be slowing a modest housing recovery.

The National Association of Realtors says sales of previously occupied homes fell 5.4 percent in June to a seasonally adjusted annual rate of 4.37 million homes. That's the fewest since October.

Sales are up 4.5 percent from a year ago, evidence that the market is still recovering. But the annual sales pace is below the 6 million that economists consider healthy.

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"Despite the frictions related to obtaining mortgages, buyer interest remains solid," said NAR chief economist Lawrence Yun. "But inventory continues to shrink and that is limiting buying opportunities. This, in turn, is pushing up home prices in many markets. The price improvement also results from fewer distressed homes in the sales mix."

The number of first-time buyers, critical to a housing recovery, made up just 32 percent of sales. That's down from 34 percent in May. In healthy markets, first-time buyers make up more than 40 percent of the market.

Despite the slowdown in sales, home prices are climbing. The national median price for existing homes for all housing types was $189,400 in June, up 7.9 percent from a year ago. The gain last month was the strongest since February 2006, when the median price rose 8.7 percent from the year-ago period.