Existing Home Sales Volumes Decline in September 2011

Econintersect’s analysis of existing home sales volumes in September 2011 shows a drop of 7.0% month-over-month but still remains in a strong up trend.  Year-over-year growth of home sales is 14.5% – a very pretty number.

Econintersect review of the home sales prices show they are down 3.0% month-over-month, and 2.5% year-over-year.  It was home prices which looked ugly in September – but Septembers are always ugly.

Here are the words from the NAR:

Lawrence Yun, NAR chief economist, said the market has been stable although at low levels, and there is plenty of room for improvement. “Existing-home sales have bounced around this year, staying relatively close to the current level in most months,” he said. “The irony is 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 of September 2010. Even so, the volume of successful buyers is higher than a year ago and is remaining fairly stable – this speaks to an unfulfilled demand.”

The NAR press release hit on mortgage availability and again on cancellations causing “poor” numbers.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said access to credit is unbalanced. “All year we’ve been discussing the fact that many creditworthy home buyers are being denied mortgages,” he said. “On top of that, loan limits have been lowered, which means 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 – not place more obstacles in the way of financially qualified buyers.”

Contract failures were reported by 18 percent of NAR members in September, unchanged from August; they were 9 percent in September 2010. Contract failures are cancellations caused by declined mortgage applications, failures in loan underwriting from appraised values coming in below the negotiated price, or other problems including home inspections and employment losses.

Regardless of cancellation and mortgage availability, home sales volumes remain in an uptrend.

Home prices continue to fall. The drop this month was not unusual for Septembers.

Econintersect will do a more complete analysis of home prices when the Case-Shiller data is released. The situation according to the NAR:

The national median existing-home price for all housing types was $165,400 in September, down 3.5 percent from September 2010. Distressed homes – foreclosures and short sales typically sold at deep discounts – accounted for 30 percent of sales in September (18 percent were foreclosures and 12 percent were short sales), down from 31 percent in August and 35 percent in September 2010.

According to the NAR, all-cash sales accounted for 30% of transactions in September.

Investors purchased 19 percent of homes in September, down from 22 percent in August; they were 18 percent in September 2010. First-time buyers accounted for 32 percent of transactions in September, unchanged from August; they were also 32 percent in September 2010.

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