NEW YORK, N.Y. ( TheStreet) -- The National Association of Realtors said Thursday that existing home sales fell 5.1% in June to a seasonally adjusted annual rate of 5.37 million units. Economists had expected the figure to come in at 5.18 million units, an 8.1% decline, compared with 5.66 million sales in May.

Despite the drop, home sales grew 9.8% year-over-year compared with sales of just 4.98 million homes in June of last year. The easing pace of month-over-month home sales was attributed to federal tax credits for first-time homebuyers expiring at the end of April.

The SPDR S&P Homebuilders ( XHB - Get Report), an exchange-traded fund that tracks the homebuilder sector, jumped nearly 4% in morning trading. Shares of Lennar ( LEN - Get Report), among the XHB's top holdings, bid up 4.3% on the news, while fellow builders KB Home ( KBH - Get Report) and Toll Brothers ( TOL - Get Report) were also comfortably in positive territory.

Home sales that were meant to close ahead of the tax credit expiration but were delayed will show up over the next two months, said Lawrence Yun, chief economist of the NAR.

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Mitchell Hochberg, a residential real estate expert at Madden Real Estate Ventures in New York, said Thursday's home sales data "shows the housing industry slogging through a swamp looking for solid ground," adding that "with mounting foreclosures, growing consumer pessimism and a rise in inventory, the only path to recovery is an increase in employment."

Yun agreed, saying that "only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels."

The Labor Department said earlier this month that the nationwide unemployment rate dipped to 9.5% in June, and that the private sector had added 83,000 jobs. However, it gave word Thursday morning that initial jobless claims rose by 37,000 to 464,000 last week, exceeding the 445,000 claims that economists anticipated. Clearly, the still-struggling jobs market has a ways to go.

Fewer sales led to a 2.5% bump in the number of homes still on the market, month-over-month. Just fewer than four million homes were up for sale at the end of June, the highest monthly supply since August of last year.

The NAR said the median existing-home prices in June were $183,700, representing a 1% uptick from year-earlier prices. But growing levels of home inventories could, in turn, push home prices lower.

"The supply of homes on the market is higher than we'd like to see," Yun said, "but home prices are still holding their ground because prices had already overcorrected in many local markets."

Distressed home sales accounted for 32% of all sales last month, up from 31% in May and flat compared with June of 2009.

-- Reported by Miriam Marcus Reimer from New York.

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