By Mike Colpitts
Homes sales slipped in September following a gain the previous month, but remained ahead of a year ago, according to the National Association of Realtors. The slide in sales represented only a small 3% decrease.
Existing home sales, which include the sale of single family homes, townhouses and condominiums, reached an adjusted annual pace of 4.91 million units. Sales improved during the usually popular summer selling season, but then slowed as fall approached.
The housing market has been battered by a series of issues, including high unemployment, a foreclosure crisis that has remained at record levels and severe underemployment, all of which slash the ability of consumers to purchase homes or make mortgage payments.
“Existing-home sales have bounced around this year, staying relatively close to the current level in most months,” said NAR chief economist Lawrence Yun. “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.”
The volume of home buyers hoping to make a purchase has increased over a year ago as mortgage lending in many areas of the U.S. shows improvement with near record low mortgage rates.
Buyers able to qualify for a home loan or pay cash for property is increasing, despite the most rigid mortgage underwriting qualifications in decades. “The volume of successful buyers is higher than a year ago and is remaining fairly stable,” said Yun.
Contract failures were reported on 18% of NAR member transactions in September, unchanged from August. Failures were only 9% a year ago. Most cancellations were caused by declined mortgage applications, appraised values coming in under the negotiated price and other issues related to home inspections and employment.
Existing home sales in the Northeast rose 2.6% during September, and are 6.8% above a year ago, which was right after the federal home buyer tax credit expired. Sales in the Midwest slipped 0.9% for the month to a pace of 1.09 million units but are 17.2% above 2010 levels.
In the South, sales fell 2.6% in September, but are 10.5% above last year. The West took the hardest hit in the drop-off of activity as sales declined 8.8% for the month, despite the lowest home prices in years.