The sales rate of existing homes fell in October, following two monthly sales increases, according to a report by the National Association of Realtors.
Closed sales of single-family homes, townhomes, condominiums and co-ops dropped to a seasonally adjusted annual rate of 4.43 million in October, down 2.2 percent from September.
That’s also a 25.9 percent drop compared to October 2009, when the seasonally adjusted annual sales rate stood at 5.98 million — sales received a lift at that time due to the approaching Dec. 1, 2009, deadline of a federal first-time homebuyer tax credit program.
Year-to-date, sales are down 2.9 percent, to 4.15 million, compared to the same period in 2009. Sales had previously risen month-to-month in August and September.
"The housing market is experiencing an uneven recovery, and a temporary foreclosure stoppage in some states is likely to have held back a number of completed sales," said Lawrence Yun, NAR’s chief economist, in a statement
He also said that sales activity appears to be "off the bottom and is attempting to settle into normal, sustainable levels. Based on current and improving job market conditions, and from attractive affordability conditions, sales should steadily improve to healthier levels of above 5 million by spring of next year."
Distressed properties made up a slightly smaller share of sales in October: 34 percent compared to 35 percent in September. That’s an increase, however, from October 2009, when distressed sales stood at 30 percent of overall sales.
First-time buyers accounted for 32 percent of sales, flat from September but down from 50 percent in October 2009. Investors made up a somewhat bigger share of buyers, 19 percent, up from 18 percent in September and 14 percent in October of last year. Repeat buyers accounted for the remainder of sales.
Though unchanged from September, the share of buyers who paid all cash in October rose to 29 percent, compared to 20 percent the same month last year.
Existing homes sold for a median $170,500 in October, down 0.9 percent compared to last year and 6.8 percent compared to this year’s peak so far: $183,000 in June.
After price increases in March, April, May and June — leading up to the deadline for the latest homebuyer tax credit program — prices began to decline in July and have continued to fall.
Year-over-year, prices fell the most in the West, -4.8 percent, to a median $209,300. In the Midwest, the median price fell 3.6 percent, to $139,500. In the South, the median price fell slightly, -0.7 percent, to $148,500.
The Northeast was the only region to see a year-over-year price increase in October, up 1.9 percent, to $240,200.
Total unsold inventory stood at 3.9 million in October, down 3.4 percent from September but up 8.4 percent from October 2009. In terms of months’ supply, inventory dipped slightly from September, 0.9 percent, to 10.5 months at the current sales pace. That’s represents a 45.8 percent increase from October 2009, however, when the inventory was 7.2 months.
A supply of six months’ inventory is considered to represent a rough equilibrium between a buyer’s market and a seller’s market, with a larger supply possibly indicating a buyer’s market.
NAR said "overly tight credit" was holding back the housing recovery.
"A review of recently originated loans suggests that they have overly stringent underwriting standards, with only the highest creditworthy borrowers able to tap into historically low mortgage interest rates. There could be an upside surprise to sales activity if credit availability is opened to more qualified homebuyers who are willing to stay well within budget," Yun said.
"A return to commonsense loan underwriting standards would go a long way toward achieving responsible, sustainable homeownership," said Ron Phipps, NAR’s newly installed president, in a statement.
"In addition, all home valuations should be made by competent professionals with local expertise and full access to market data — there remains an elevated level of appraisals that fail to provide accurate valuation, which is causing a steady level of sales to be cancelled or postponed."
A separate NAR survey found 10 percent of Realtors said they had a contract canceled in October because of a low appraisal, while 13 percent said they had a contract delayed, and 16 percent said a contract was negotiated to a lower sales price due to a low appraisal, the report said.
Regionally, the South saw the biggest month-to-month decrease in sales, down 3.4 percent to 1.7 million. Year-over-year, sales fell 24 percent.
Sales activity in the West fell 1.9 percent month-to-month, to 1 million. Sales fell the least in this region compared to October 2009, down 21.4 percent.
In the Northeast, the sales rate fell 1.3 percent month-to-month, to 750,000. Year-over-year, sales in this region saw the second biggest drop, down 27.2 percent.
The Midwest saw the smallest month-to-month drop in sales, -1.1 percent, but the largest year-over-year drop, down 32.4 percent, to 940,000.
A separate report from the California Association of Realtors revealed statewide existing-home sales declines in October. Sales of existing, single-family homes in the Golden State fell 3.5 percent month-to-month and 19.6 percent year-over-year, to a seasonally adjusted annualized rate of 450,360.
Beth L. Peerce, CAR’s president, said in a statement, "October’s home sales figures reflect the seasonal decline in sales that typically occurs this time of year. Additionally, persistent worries about the economy and job security are affecting home sales, despite low mortgage rates and strong affordability."
She also said that the state experienced "particularly strong sales in October (2009) and November 2009, as buyers rushed to beat the then-anticipated federal tax credit expiration at the end of November 2009."
Homes sold for a median $304,220, down 1.8 percent from September, but rose 2.3 percent compared to October 2009 — marking 12 straight months of year-over-year price gains, the report said.
"We’re really seeing two different housing markets — one at the lower-end driven by first-time buyers and investors, which is keeping prices stable, and one with nostalgic sellers who set unrealistic asking prices," said Leslie Appleton-Young, CAR’s vice president and chief economist, in a statement.
"Sellers need to consider current market conditions when pricing their home in order to facilitate a shorter time on the market."
It took a median 53.4 days to sell a California home in October, compared to 34.1 days the same month in 2009. Inventory stood at 6.5 months last month, up from 6.1 months in September and 4.2 months in October 2009.
The Monterey County region saw the biggest year-over-year median price jump: 16.7 percent, to $280,000. The Santa Barbara South Coast region saw the biggest price decline, down 10.5 percent, to $864,000, which was nevertheless the highest median price of any