The NAR’s existing homes sales numbers are out, and show a 10.6 percent drop in sales volume versus year-ago levels:

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – eased by 0.3 percent to a seasonally adjusted annual rate1 of 5.99 million units in May from an upwardly revised pace of 6.01 million in April, and are 10.3 percent below the 6.68 million-unit level in May 2006.

Median price also declined, dropping 2.1 percent from year-ago:

The national median existing-home price for all housing types was $223,700 in May, which is 2.1 percent below May 2006 when the median was $228,500.

Lawrence Yun, the NAR’s chief economist, waxed poetic about the ‘psychological’ reasons for the slump, saying, “I think psychological factors are currently the biggest drag on the housing market, in addition to a disruption from tighter credit for subprime borrowers.” Yun couldn’t be more wrong. Tighter credit availability is tied to quickly declining asset performance. Borrowers aren’t blind to this, like Yun seems to think they are — they’re simply reacting to the new reality of the marketplace. Yun makes it sound as if borrowers’ newfound reticence is purely a mental issue in need of a little positive thinking. For its part, the AP coverage notes that the pace of existing homes is the slowest since 2003, and inventory has reached levels not seen since the early 1990s:

In a troubling sign for the future, the inventory of unsold homes rose by 5 percent to 4.43 million units in May, a level that would take 8.9 months to clear out at the May sales pace. That is the highest inventory level since the last deep slump in housing in 1992.

But I’m sure this is all the result of “psychological factors.” Just remember — like Lawrence Yun says, it’s all in our head.