The number of buyers who signed contracts to purchase homes dropped in June, as the weak economy and tight lending standards kept consumers away from the housing market.
The National Association of Realtors said Tuesday that its seasonally adjusted index of sales agreements for previously occupied homes dipped 2.6 percent to a reading of 75.7.
That was the lowest on records dating back to 2001 and down nearly 19 percent from the same month a year earlier. The index has fallen by more than 40 percent from its peak in April 2005. May's reading was revised slightly downward to 77.7.
High unemployment, weak job growth and tight credit have hurt the housing market. Sales picked up in the spring when the government was offering tax credits of up to $8,000. However, once the tax credits expired on April 30, sales plunged.
Economists say the government incentives prompted many buyers who might have signed contracts during May and June to move their purchases up. That's one reason for the sharp decline.
But they also point to the growing inventory of unsold homes on the market. It has risen to almost 4 million. That's nearly a nine-month supply at the current sales pace, the highest level since August. It compares with a healthy level of about six months. And that doesn't include millions of foreclosed homes that have yet to go onto the market.