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Existing-Home Sales Decline by 3% in September

Still-tight credit and failed contracts helped scuttle more hopeful forecasts for total existing-home sales, which fell by 3 percent over September.


The ""National Association of Realtors"":http://www.realtor.org/ (NAR) reported a decline in the numbers to a seasonally adjusted annual rate of 4.91 million, down from revisions for 5.06 million over August, albeit still above the 4.41-million annual rate seen in September last year.

""Lawrence Yun"":http://www.realtor.org/research/chief_economist_bio, chief economist with NAR, said in a ""statement"":http://www.realtor.org/ro/research/a73e1413ba619f553a3db7fc225790c5/release.htm that the September totals for existing-home sales show ""plenty of room for improvement,"" adding that ""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"" seen over the same time last year.

He said a higher volume of in-the-works property sales ""speaks to an unfulfilled demand"" that remains in the market.

NAR attributed failed bids for property sales and denials for otherwise creditworthy borrowers to cancelled contracts, conflicting appraisals, and a bevy of other routine problems, including home inspection missteps and sudden job losses.

More members with the trade group reported failed contracts over September, with numbers rising to 18 percent this year from 9 percent last year.

Single-family home sales declined by 3.6 percent to hit a seasonally adjusted annual rate of 4.33 million over September, down from 4.49 million over August, albeit 12.2 percent above 3.86 million units seen from September last year.

The average going-rate for an existing single-family home sale over September: $165,600, reflecting a 3.9-percent decline from last year.

Existing condominiums and co-op sales went up by 1.8 percent to reach a seasonally adjusted annual rate of 580,000 over September, up from


570,000 in August and 5.6 percent above a rate of 549,000 units from last year.

The average price for existing condo sales last month: $163,800, down 1 percent from September 2010.

The trade group portrayed lower limits for conforming mortgages backed by the government as changes that will contribute to fewer existing-home sales.

NAR President ""Ron Phipps"":http://www.realtor.org/about_nar/fullbio_phipps, also broker-president of Warwick-based ""Phipps Realty"":http://www.phippsrealty.com/, said the lower limits mean that ""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 ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô not place more obstacles in the way of financially qualified buyers,"" he added.

Writing a widely circulated note to readers, ""Paul Dales"":http://www.capitaleconomics.com/staff/global-economics/paul-dales.html, senior U.S. economist with ""Capital Economics"":http://www.capitaleconomics.com/, offered that ""[w]e don't think lower loan limits will significantly depress overall sales, but they won't help when credit is already hard to get.""

All-cash sales remained largely the same, with 29 percent of purchase activity recorded in August inching forward to 30 percent in September. The figures fell in line with earlier reports over the summer that cash buyers would pull back from an all-time high for activity seen last spring.

Investors sopped up 19 percent of homes for sale last month, fewer than 22 percent from August and 18 percent over September last year.

First-time buyers picked up 32 percent of transactions from September, the same figures reported from the month before and September last year.

NAR offered up declines in housing inventory by the close of September to 2 percent, reflecting a 3.48-million share of homes still available for sale. This translates into an 8.5-month supply at current sales rates in rough comparison with an 8.4-month supply from August.

The big picture?

Dales attributed slashes in existing-home sales to still-anemic demand and a foreclosure glut that continues to compete with new home construction.

""The upshot is that sales are being held back by a lack of demand, not low supply,"" he wrote, adding that ""a sustained housing recovery cannot occur without first-time and repeat buyers, who are constrained by underwater mortgages and increasingly tight credit conditions.""

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.

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