Purchases of existing homes dropped less than forecast in June, but the decine still added to the growing amount of evidence that the housing market will slump as the effects of the federal tax credit for first-time home buyers fade, Bloomberg reported.

It was the second-straight month that purchases dropped, with the annual rate dropping to 5.37 million, down 5.1 percent, according to National Association of Realtors (NAR) figures.

“We’re seeing the first stage of the cooling as the taxincentive purchases fall off,” Avery Shenfeld, chief economist at CIBC World Markets in Toronto, told Bloomberg. “We will see prices retreat as the demand falls off without the tax incentive.”

The NAR’s chief economist said the number of transactions will be “very low” in the coming months.

Though purchases of existing homes increased 7.2 percent and the median price increased 1 percent from a year earlier, the number of previously owned homes on the market climbed 2.5 percent to 3.99 million in June. It would take 8.9 months at the current sales pace to sell those houses, the most since August 2009, Bloomberg reported.

Foreclosures and short-sales are boosting the “shadow inventory” and creating competition with those owners trying to sell properties, Bloomberg reported. Home seizures increased 38 percent in the second quarter from the same period last year.