Existing home sales fall 3% in September
Existing home sales fell 3% in September, but remain above year ago levels, the National Association of Realtors said Thursday.
During the month, existing home sales reached a seasonally adjusted annual rate of 4.91 million units, down from 5.06 million in August, NAR said. That is still up 11.3% from an annual rate of 4.41 million units in September of last year.
"Existing-home sales have bounced around this year, staying relatively close to the current level in most months," said Lawrence Yun, chief economist for NAR. "The irony is affordability conditions have improved to historic highs and more creditworthy borrowers are trying to purchase homes, but the share of contract failures is double the level of September 2010. Even so, the volume of successful buyers is higher than a year ago and is remaining fairly stable – this speaks to an unfulfilled demand."
Ron Phipps, NAR's president, said there are several factors that continue to weigh on the mortgage market, including a lack of credit for worthy borrowers who are still being denied mortgages.
"The modest fall in existing home sales in September shows that the housing market is struggling to gain any traction in this poor economic climate," according to analysts at Toronto-based Capital Economics. "In fact, it is hard to see home sales rising at all when mortgage applications are at a 15-year low and falling."
Eighteen percent of NAR members reported contract failures in September, which is unchanged from August and up from September of last year. Contract failures are generally tied to failures in loan underwriting after appraisals come in lower than listed home prices and other problems stemming from job losses and home inspections.
The modest fall in existing home sales in September shows that the housing market is struggling to gain any traction in this poor economic climate. In fact, it is hard to see home sales rising at all when mortgage applications are at a 15-year low and falling.
The median national home price for existing homes hit $165,400 in September, down 3.5% from last year. Distressed homes made up 30% of all September sales, up from 35% last year.
Meanwhile, total housing inventory declined 2% to 3.48 million existing homes for sale.
Analyzing home sales by region, NAR found sales rose 2.6% in the Northeast in September, while declining 8.8% in the West and dropping a slight 0.9% and 2.6% in the Midwest and South, respectively.
The West performed the worst in sales and also noted the median home price fell 4.5% below year ago levels.
Write to Kerri Panchuk.
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