September Existing Home Sales, Prices Slide

The National Association of Realtors (NAR) reported this morning that existing home sales declined by 1.7% to a seasonally adjusted annual rate of 4.75 million units in September, compared with an upwardly revised 4.83 million units in August. Analysts had been expecting a rate of 4.8 million units.

The NAR's chief economist noted:

Despite occasional month-to-month setbacks, we're experiencing a genuine recovery. More people are attempting to buy homes than are able to qualify for mortgages, and recent price increases are not deterring buyer interest. Rather, inventory shortages are limiting sales, notably in parts of the West.

Total housing inventory stood at 2.32 million existing homes at the end of September, down 3.3% from 2.47 million in August. The total represents a 5.9-month supply at the pace of sales, down from a 6.0-month supply in August. In August 2011, the inventory stood at an 8.1-month supply, some 20% higher than this year.

Distressed sales accounted for 24% of September sales, a decrease from 30% of September 2011 sales and up from 22% of sales in August. Foreclosed properties sold for a discount of 21% in September, and short sales were discounted 13%.

The nationwide median price for an existing home sale was $183,900, up 11.3% from September 2011, but $3,500 lower than August's median price of $187,400. This is the seventh consecutive month that year-over-year prices have improved, but the sharp drop from the August sales price is a surprise.

According to the NAR, month-to-month median price comparisons "do not compensate for seasonal changes, especially for the timing of family buying patterns." So perhaps the big drop in the median home price is not remarkable. Still, the NAR could have said something about it.

Paul Ausick