Existing home sales in the US were down in September on the back of a strong gain in August, but remain well above a year ago.
Total existing homes sales, which are completed transactions that include single family, townhomes, condominiums and co-ops, declined 3% to a seasonally adjusted annual rate of 4.91 million in September from an upwardly revised 5.06 million in August, but are 11.3 percent above the 4.41 million unit pace in September 2010.
The national median existing home price for all housing types was $165,400 in September, down 3.5% from September 2010.
Regionally, existing home sales in the Northeast rose 2.6% and are 6.8% above a year ago. The median price in the Northeast was $229,400, down 3.3% from September 2010.
Existing home sales in the Midwest slipped 0.9% in September but are 17.2% higher than September 2010. The median price in the Midwest was $137,400, which is 1.4% below a year ago.
In the South, existing home sales declined 2.6% but are 10.5% above a year ago. The median price in the South was $144,400, down 3% from September 2010.
Existing home sales in the West fell 8.8% but are 10.7% higher than September 2010. The median price in the West was $207,400, which is 4.5% below a year ago.
‘The falloff in Western sales from a surge in August was expected because many lenders had lowered mortgage loan limits over concerns that sales wouldn’t close before the higher loan limits expired at the end of the September,’ said Lawrence Yun, NAR chief economist.
‘Given the concentration of higher cost housing in the West, particularly in California, many buyers were motivated to close in the months leading up to the changeover while they could still get low interest rates on conventional mortgages. Unless Congress reinstates the higher limits, the overall housing market recovery will be slower than it otherwise could be, and will hold back the broader economic recovery,’ he added.
Yun said the market has been stable although at low levels, and there is plenty of room for improvement. ‘Existing home sales have bounced around this year, staying relatively close to the current level in most months,’ he explained.
‘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,’ he added.
Contract failures were reported by 18% of NAR members in September, unchanged from August, but are double what they were in September 2010. Contract failures are cancellations caused by declined mortgage applications, failures in loan underwriting from appraised values coming in below the negotiated price, or other problems including home inspections and employment losses.
According to NAR president Ron Phipps one of the main problems hindering the real estate market at president is access to credit. ‘All year we’ve been discussing the fact that many creditworthy home buyers are being denied mortgages,’ he said.
‘On top of that, loan limits have been lowered, which means buyers of higher priced homes, including many in more expensive housing markets, now have to pay a higher interest rate for a jumbo mortgage than buyers who can qualify for a conventional loan. We need to remove the roadblocks to a housing recovery, not place more obstacles in the way of financially qualified buyers,’ he added.
All cash sales accounted for 30% of purchase activity in September, up from 29% in August and 29% in September 2010. Property investors make up the bulk of cash purchases.
Investors purchased 19% of homes in September, down from 22% in August. First time buyers accounted for 32% of transactions in September, unchanged from August.
Distressed homes, foreclosures and short sales typically sold at deep discounts, accounted for 30% of sales in September of which 18% were foreclosures and 12% were short sales. They were down from 31% in August and 35% in September 2010.
