Despite Surge in Cancellations Existing Home Sales Rise

Sales of existing homes improved in October whilerninventories declined according to the National Association of Realtors® monthlyrnreport.  Total sales increased 1.4rnpercent to a seasonally adjusted annual rate of 4.97 million in October from arndownwardly revised (from 4.91 million) 4.90 million units in September.  October sales were 13.5 percent higher thanrnthe 4.38 million annual rate one year earlier. rn Existing home sales include completedrntransactions on single-family, townhomes, condominiums, and cooperativernapartments. </p

Single family sales rose from anrnannual rate of 4,310,000 in September to 4,380,000, an increase of 1.6rnpercent.  Condo and coop sales were unchanged at 590,000.  Single-familyrnhomes sales were up 13.8 percent on an annual basis and condo sales increasedrnby 10.5 percent.  Existing condominium and co-op sales were unchanged at a seasonallyrnadjusted annual rate of 590,000 in October but are 10.5 percent above the 534,000-unitrnlevel in October 2010.  </p

Even more positive was the continuing decline inrninventory.  There were 3.33 millionrnexisting homes available for sale at the end of October, an 8.0 month supply atrnthe current sales pace.  This is a 2.2rnpercent decline from the number of homes for sale last month when the inventoryrnstood at 8.3 months.  Inventories have been gradually trending lower since settingrna record of 4.58 million in July 2008.</p

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The national median existing-home pricernfor all housing types was $162,500 in October, which is 4.7 percent below Octoberrn2010 and the median existing single-family home price was $161,600, 5.8 percentrnbelow October 2010 and the condo price was $160,300 down 1.5 percentrnon an annual basis. </p

Distressed homes typically sold at deeprndiscounts but the share of foreclosures and short sales slipped to 28 percentrnof sales in October from 30 percent in September.  REO made up 17 percent of sales and 11rnpercent were short sales.  Distressedrnhomes held a 34 percent market share in October 2010.</p

Lawrence Yun, NAR Chief Economist said, “Inrnsome areas we’re hearing about shortages of foreclosure inventory in the lowerrnprice ranges with multiple bidding on the more desirable properties.  Realtors in such areas are calling for a faster process ofrngetting foreclosure inventory into the market because they have ready buyers.”  </p

First-time buyers accounted for 34rnpercent of transactions in October compared to 32 percent both in September andrna year ago.  Investors purchased 18rnpercent of homes, down slightly from the 19 percent posted in both Septemberrn2011 and October 2010.  Twenty-ninernpercent of purchases were all cash, virtually unchanged month-over-month andrnyear-over-year.  Investors make up thernbulk of cash transactions.</p

Contract failures were again an issue.  Cancellations caused by declined mortgagernapplications, underwriting problems due to appraised values, and other problemsrnincluding inspection issues and job loses jumped to 33 percent in October fromrn18 percent in September and 8 percent a year ago.  Yun said this was one factor holding backrnhigher sales.  “Other recent factorsrninclude disruption in the National Flood Insurance Program and lower loan limits for conventional mortgages, whichrnparadoxically force some of the most creditworthy consumers to payrnunnecessarily higher interest rates,” Yun said.  </p

In the Northeast region existing home sales were downrn5.1 percent to an annual rate of 750,000 but were 1.4 percent above Octoberrn2010.  The median price in the region wasrn$224,400, down 5.5 percent from last year.</p

Existing-home sales in the Midwest rose 2.8 percent in Octoberrnto a pace of 1.10 million and are 19.6 percent higher than October 2010.  The median price in the Midwest was $132,800,rnwhich is 4.7 percent below a year ago.</p

Sales in the South increased 2.1 percent to an annual levelrnof 1.94 million in October and are 14.1rnpercent above a year ago while the median pricerndipped 1.6 percent to $145,700. </p

In the West the pace of sales rose 4.4 percent to 1.19rnmillion.  This is 15.5 percent higherrnthan in October 2010.  The median pricernwas $207,500, down 1.6 percent on an annual basis. 

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