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Sales of Existing Homes Fall from Six-Year High

Paul Ausick

The National Association of Realtors (NAR) reports that the seasonally adjusted annual rate of existing home sales in September fell 1.9% to 5.29 million from an downwardly revised total of 5.39 million in August. Sales were up 10.7% year-over-year for the month. The consensus estimate called for sales to reach 5.3 million. September sales fell from an August total that was the best since February 2007, when 5.79 million existing homes were sold.

Housing inventory was essentially flat in September at 2.21 million homes, which is equal to a supply of five months, compared to a 4.9-month supply in August. Listed inventory is down 1.8% year-over-year, when there was a 5.4-month supply available.

According to the NAR, the national median existing home price in September was $199,200, down from $212,100 in August, but up 11.7% compared with September 2012. That marks the 19th consecutive month to see a price gain and the 10th consecutive month of double-digit increases.

NAR's chief economist said:

Affordability has fallen to a five-year low as home price increases easily outpaced income growth. Expected rising mortgage interest rates will further lower affordability in upcoming months. Next month we may see some delays associated with the government shutdown.

Sales of single-family homes fell 1.5% on a seasonally adjusted annual basis from 4.75 million in August to 4.68 million in September. Sales of multifamily homes fell by 4.7 million units, from an annual rate of 640,000 in August to 610,000 in September

Foreclosed and short sales accounted for 14% of September sales, up from 12% of August sales and below the 24% share in September 2012. Foreclosures sold at an average 16% discount to the September median price, while short sales sold at a discount of 12%. Both discounts were unchanged month-over-month.

Existing, non-distressed homes were on the market for an average of 49 days, while foreclosed homes were on the market for an average of 43 days and short sales took a median of 93 days to sell.

The federal government shutdown caused a delay in the tax transcripts needed for mortgage loan approvals in October and could be a further drag on next month's sales report.