Existing-home sales dropped 11.7 percent in June to a seasonally adjusted annual rate of 5.07 million units from a level of 5.74 million units in May.

Last month's sales activity was 4.3 percent below the 5.30-million unit pace in June 2001.

The four highest months on record were all in 2002: January, February, April and May.

David Lereah, NAR's chief economist, said a general cooling of the housing market was expected.

"After experiencing record highs during the first part of the year, existing home sales eventually were bound to decline to more sustainable levels," he said.

Regionally, home resale activity in the South declined 7.3 percent in June to an annual rate of 2.04 million units, and was 3.3 percent below June 2001. The median price of an existing home in the South was $155,100, which was 6.5 percent higher than June 2001.

Existing home sales in the Northeast dropped 11.8 percent from May to a pace of 600,000 units in June, and were 6.3 percent lower than June 2001. The median existing home price in the Northeast was $167,900, up 11.2 percent from a year ago.

Homes in the Midwest were reselling at an annual rate of 1.08 million units in June, 13.6 percent below May and 4.4 percent lower than June 2001. The median price in the Midwest was $137,100, up 5.5 percent from a year ago.

The existing home sales pace in the West dropped 16.1 percent from May to an annual rate of 1.35 million units in June, and was down 4.9 percent from June 2001. The median existing home price in the West was $224,500, up 12.7 percent from the same month a year earlier.