The markets and many exchange traded funds (ETFs) declined today partially in response to the news that the sales of existing homes fell in July for the fifth consecutive month. Sales of existing homes declined to their slowest pace in five years, and home prices dropped for a record 12th straight month, according to Tim Paradis for the Associated Press.

Carl Delfeld for ETF XRAY shares that U.S. homebuilders continue to cut previously planned projects in response to the housing slump. Also, the closure of more mortgage banking firms and the deterioration of the mortgage sector in general have reduced participation in the sector. In response to the lack of activity and closures, credit standards have been strictly tightened, which eliminates many previously-eligible potential homeowners.

ETFs likely to be especially affected by the news include the usual suspects: iShares Dow Jones U.S. Real Estate (IYR), SPDR S&P Homebuilders (XHB) and Financial Select Sector SPDR (XLF), all of which were down today.

Tags: Financial, Homebuilders, Real Estate, Sector ETFs