September existing home sales in the United States declined modestly but the national median home price recorded its seventh back to back monthly increase from a year earlier, according to the latest report from the National Association of Realtors.

Total existing home sales, which are completed transactions that include single family homes, town homes, condominiums and co-ops, fell 1.7% to a seasonally adjusted annual rate of 4.75 million in September from an upwardly revised 4.83 million in August, but are 11% above the 4.28 million unit level from a year ago.

Lawrence Yun, NAR chief economist, said the market trend is up. ‘Despite occasional month to month setbacks, we're experiencing a genuine recovery. More people are attempting to buy homes than are able to qualify for mortgages, and recent price increases are not deterring buyer interest. Rather, inventory shortages are limiting sales, notably in parts of the West,’ he explained.

The national median existing home price for all housing types was $183,900 in September, up 11.3% from a year ago. The last time there were seven consecutive monthly year on year increases was from November 2005 to May 2006.

Distressed homes, that is foreclosures and short sales sold at deep discounts, accounted for 24% of September sales of which 13% were foreclosures and 11% were short sales. This was up from 22% in August but down from the 30% recorded in September 2011. Foreclosures sold for an average discount of 21% below market value in August, while short sales were discounted 13%.

Total housing inventory at the end September fell 3.3% to 2.32 million existing homes available for sale, which represents a 5.9 month supply at the current sales pace, down from a six month supply in August. Listed inventory is 20% below a year ago when there was an 8.1 month supply.

‘The shrinkage in housing supply is supporting ongoing price growth, a pattern that could accelerate unless home builders robustly ramp up production,’ Yun said.

The median time on market was 70 days in September, unchanged from August, but down 30.7% from 101 days in September 2011. Some 32% of homes sold in September were on the market for less than a month, while 19% were on the market for six months or longer.

However, NAR president Moe Veissi said that some buyers who could easily afford a mortgage can't assume they'll get one. ‘Home buyers need to be more focused on the mortgage process in the current environment where lenders and banking regulators are being risk averse,’ he said.

‘Shopping for competitive mortgage terms is a good idea, but it may be more important to find a bank that is willing to work with you given your credit history. Realtors can often recommend lenders that may have more reasonable underwriting standards,’ he added.

The report also shows that first time buyers accounted for 32% of purchasers in September, compared with 31% in August and is at the same level as it was a year ago.

All cash sales were at 28% of transactions in September, up from 27% in August but lower than the 30% recorded in September 2011. Investors, who account for most cash sales, purchased 18% of homes in September, unchanged from August and slightly below the 19% in September 2011.

Single family home sales declined 1.9% to a seasonally adjusted annual rate of 4.21 million in September from 4.29 million in August, but are 10.8% higher than the 3.80 million unit level in September 2011. The median existing single family home price was $184,300 in September, up 11.4% from a year ago.

Existing condominium and co-op sales were unchanged at a seasonally adjusted annual rate of 540,000 in September, but are 12.5% above the 480,000 unit pace of a year ago. The median existing condo price was $181,000 in September, which is 10% higher than September 2011.

Regionally, existing home sales in the Northeast fell 6.3% to an annual level of 590,000 in September but are 7.3% above September 2011. The median price in the Northeast was $238,700, up 4.1% from a year ago.

Existing home sales in the Midwest slipped 0.9% in September to a pace of 1.10 million but are 19.6% higher than a year ago. The median price in the Midwest was $145,200, up 7% from September 2011.

In the South, existing home sales increased 0.5% to an annual level of 1.93 million in September and are 14.2% above September 2011. The median price in the region was $163,600, up 13.1% from a year ago.

Existing home sales in the West fell 3.4% to an annual pace of 1.13 million in September but are 0.9% above a year ago. With continuing inventory shortages in the region, the median price in the West was $246,300, which is 18.4% higher than September 2011.

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