The NAR (National Association of Realtors) reported that sales of existing homes fell 3.0 percent last month, from a seasonally adjusted annual rate of 5.06 million in August to 4.91 million in September, 11.3 percent above the level of a year ago.
More importantly, median home prices fell 3.5 percent to $165,400 from a year ago and that trend is likely to continue in the months ahead as traditional buyers continue to exit the market after the conclusion of the summer sales season and investors make up an increasing share of purchases, in many cases paying cash for distressed properties.
Distressed sales accounted for 30 percent of all sales in September – 18 percent foreclosures and 12 percent short sales – down from 31 percent in August, but this market share should rise over the winter months putting more downward pressure on prices.
The supply of unsold homes fell 2.0 percent to 3.48 million units representing an 8.5 month supply at the current sales pace, up from an 8.4 month supply in August.
In an era of “freakishly low” borrowing costs – rates for 30-year fixed mortgages recently dipped below four percent – contract cancellations continue to be a problem as the lack of qualified buyers and low appraisals slow sales, some 18 percent of all purchase contracts having been canceled last month.
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