The August numbers are out for Arizona. "It was no easy summer for home sales. May was the worst May in three years. June was the worst June in six years. July was the worst July in seven years. And now August is checking in as the worst August in four years, according to the Arizona Real Estate Center at ASU Polytechnic."

"'Slow sales activity is spreading across the Valley,' said Jay Butler, center director. 'Median prices are continuing to drop in some communities, especially in the West. It’s probably a little more investor-driven.'"

"Through August of this year, there were 47,515 sales, a nearly 40 percent decrease from the same time period in last year.

"Valley homes prices dipped again in August, marking the first time that the median price of an existing home fell below last year's levels in some areas. If August median price of $262,500 holds steady or declines this month, the region's median home price will be below the September 2005 price of $263,000."

"Jay Butler, at ASU, estimates the median price for an existing home would have likely hit a high of $205,000 last year if speculators hadn't invaded the Valley's housing market and sparked bidding wars that artificially inflated home prices."

"Some parts of the Valley are feeling the housing market's slowdown more than others. In Scottsdale, existing home sales during August fell to 390, almost half the 780 recorded during August 2005. In north Scottsdale, the city's priciest area, the median price of a home was $661,000 in August, down from $705,000 in July of this year. North Scottsdale's median used home price is also down 1 percent from a year ago."

"Matt Keller, an agent in Scottsdale, said some investors are deciding to sell and take what they can get in the current soft market. 'They're pretty much saying, 'Take it. I want to get rid of it,' Keller said. 'They're still making good money..just not as much as they were hoping.'"

"Jim Rounds, a senior economist with a Scottsdale-based consulting firm, said price declines in many parts of metropolitan Phoenix are just beginning and could continue until early 2007. Also, he said, 'new-home price reductions are right around the corner' for the Valley as the housing market's oversupply issue is corrected."

"Valley homeowners who bought at the peak of the market or tapped all their equity based on higher home prices could find themselves owing more than their house is worth now."

"R.L. Brown, who tracks the local housing market for homebuilders and real estate clients, said data through July show Valley housing starts are down 20 percent from last year, new home closings are down nearly 10 percent and sales of existing homes have fallen 28 percent."

"'I didn’t think it would get this low, and it is,' he said of new home permits. 'Frankly I don’t think there’s much expectation of dramatic improvement now through the rest of the year. It would be wishful thinking to think things are going to change in the next three months.'"

"Until the pricing drops, inventory will continue to grow and buyers will continue to stay away. 'In a sense, that drives the new home market,' Brown said. 'If they can’t sell their present house, wherever it is, then they can’t buy their new house.'"

"'We’re sort of at a drift right now,' Butler said. 'The only good thing is interest rates are somewhat lower. They seem to be on downward track, but lenders have tightened their underwriting guidelines.'"