The National Association of Realtors reports today that, for the first time in 11 years, the median price of homes sold in the United States during August declined year-over-year as buyer interest in the real estate market continued to sag.
Sales of pre-owned homes fell 0.5 percent in August to a seasonally-adjusted annual rate of 6.30 million units -- just about where economists were expecting.
Transactions were down 12.6 percent compared to the sales pace of a year ago.
The median national price for homes sold in August was $225,000, 1.7 percent lower than the level from August 2005 ($229,000).
So what's causing the downturn in prices?
Simple supply and demand is at work here. Fewer people are in the market today, thanks to rising mortgage rates.
A 30-year fixed-rate note now averages 6.4 percent according to Freddie Mac, compared to 5.8 percent a year ago.
There also are a lot more houses on the market -- at the August sales pace, it would take 7½ months to sell all the homes on the market, according to today's report.
Last year, the nation had less than five months' worth of pre-owned homes for sale.
Those two factors point to lower sales prices -- a true turn toward a buyer's market.
Despite that trend, the NAR tried to put a positive spin on the latest numbers.
"After a stronger-than-expected drop in July, the fairly even sales numbers in August tell us the market is at a more sustainable pace," David Lereah, chief economist for NAR, said in a written release.
"It keeps us on track to see the third-highest sales year on record, but we do expect an adjustment in home prices to last several months as we work through a build up in the inventory of homes on the market."
We're going to get a look at new-home sales numbers on Wednesday, and we should expect more of the same.
Also, there are likely some interesting moves coming in Washington in the coming weeks as banking regulators take a look at the risky sub-prime mortgage loans that have become quite common in the last few years.
Tom Gallagher, a political economist with the economic research firm ISI Group, suggests some new regulations could put the kibosh on risky loans, and there is political support in Congress to back up these new administrative laws.
That also could mean even lower prices for homes.
"The new regulatory guidance will reduce the availability of credit, thus reducing demand for housing and putting additional downward pressure on home prices and further slowing the economy," Gallagher wrote in his morning note.
"Record drops in housing indicators, unprecedented overvaluation in housing, and a regulatory tightening of loose lending practice strongly point to home prices dropping and a sharp increase in the number of foreclosures."
So is the sky falling on the housing market? No.
Housing is a local market issue.
You'll see prices drop in areas where jobs are problems -- such as in Michigan, auto country -- or where speculators jumped in during the last few years and spurred overdevelopment -- such as in San Diego.
In areas where jobs growth is moderate and there's real density -- such as the New York tri-state area -- you'll see a moderation of price appreciation and a longer time-to-sales pace, but no real crash.
At least, that's what the economists are saying.