Sales of existing single-family, condominium and coop homes fell to a seasonally adjusted annual rate of 4.43 million in October, a 2.2% drop from September and 25.9% below the pace of October, 2009, the National Association of Realtors reported Tuesday. Wall Street was expecting a drop to a rate of 4.53 million.
Prices also took a leg downward during the month, with the national median price dropping 0.9% to $170,500 in October. Distressed sales accounted for 34% of sales in October, down marginally from 35% in September but up from 30% in October 2009.
Year-to-date, there were 4.149 million existing-home sales, down 2.9% from 4.272 million at the same time in 2009.
Single-family sales fell 2% to an annual rate of 3.89 million, 25.6% below October 2009. The median existing single-family home price was $171,100 in October, which is 0.5% below a year earlier.
"The housing market is experiencing an uneven recovery, and a temporary foreclosure stoppage in some states is likely to have held back a number of completed sales," said Lawrence Yun, chief economist for the Realtors. "Still, sales activity is clearly off the bottom and is attempting to settle into normal sustainable levels. Based on current and improving job-market conditions, and from attractive affordability conditions, sales should steadily improve to healthier levels of above 5 million by spring of next year."
Total housing inventory at the end of October fell 3.4 percent to 3.86 million existing homes available for sale, which represents a 10.5-month supply, down from 10.6 months in September.
Existing condo and co-op sales fell 3.6% to a pace of 540,000 in October, 27.6% below a year earlier. The median price was down 4.2% to $166,000.
Regionally, the Northeast slid 1.3% to a pace of 750,000, 27.2% below October 2009, with the median price up 1.9% to $240,200. The Midwest slipped 1.1% to a level of 940,000, 32.4% below October, 2009, with the median price dropping 3.6% to $139,500. The South was down 3.4% to 1.71 million, 24% below a year before, and the median price was down 0.7% to $148,700. The West declined 1.9% to an annual level of 1.03 million, 21.4% below October 2009, and the median price dropped 4.9% to $209,300.
First-time buyers accounted for 32% if the market in October, flat with September but down from 50% in October 2009. Investors made up 19% of the market, up from 18% in September and 14% in October 2009. The balance of sales were to repeat buyers. All-cash sales were at 29% in October, the same as September but up from 20% a year earlier.
The Realtor group said problems persist with faulty appraisals. A parallel NAR survey of members revealed that 10% said they had a contract cancelled as a result of a low appraisal; 13% report said they had a contract delayed; and 16% said a contract was negotiated to a lower sales price as a result of a low appraisal.
"A return to common sense loan underwriting standards would go a long way toward achieving responsible, sustainable home ownership," said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. "In addition, all home valuations should be made by competent professionals with local expertise and full access to market data--there remains an elevated level of appraisals that fail to provide accurate valuation, which is causing a steady level of sales to be cancelled or postponed."
The NAR's Yun said problems also remain with credit standards. "A review of recently originated loans suggests that they have overly stringent underwriting standards, with only the highest creditworthy borrowers able to tap into historically low mortgage interest rates," he said. "There could be an upside surprise to sales activity if credit availability is opened to more qualified home buyers who are willing to stay well within budget."
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