Existing Home Sales Down 3 Percent In September

Published by: Dave Simmons on 20th Oct 2011 | View all blogs by Dave Simmons
Existing Home Sales Down 3 Percent In September

The National Association of Realtors reported on Thursday that sales of existing homes fell 3 percent in September, continuing a trend of tough conditions in the nation's beleaguered housing market.  The group said that sales dipped to a seasonally adjusted annual pace of 4.9 million, just ahead of the consensus estimate of analysts in a recent Bloomberg survey, who projected a pace of 4.91 million, on average.  The group also revised its previously announced figure for August sales upward toa pace of 5.06 million.

Compared to a year ago, sales in September were up about 11.3 percent.  Of course, last September the market was still in a hangover mode after a federal tax credit for homebuyers expired that had been boosting sales through the summer.  Sales continue to be weak as new, tougher conforming jumbo loan limit rules went into effect this month.  The new rules look poised to make conditions even tougher as they forced about 16 percent of buyers to drop out of the home buying process this month.

The NAR is currently forecasting a total of 4.9 million homes will be sold this year, down significantly from the 2005 peak level of just over 7 million, despite lower prices and higher average rents.  The median price of homes sold in September was $165,400, about 3.5 percent below year ago levels, while the US Labor Department reported that rental rates on primary residences has increased about 2.1 percent during that time.  The NAR's chief economist, Lawrence Yun, said that he expects rising rents to begin boosting home sales over time.

The gap in average selling price between new and existing homes in August was about $40,000, as the existing homes market continues to be pressured by a massive amount of cheaply priced foreclosures.  Distressed properties accounted for about 30 percent of existing homes sold in September, down from 31 percent in August, while foreclosures accounted for about 18 percent of sales.

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