Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, declined 2.2% to a seasonally adjusted annual rate of 4.43 million in October from 4.53 million in September, and are 25.9% below the 5.98 million-unit level in October 2009 when sales were surging prior to the initial deadline for the first-time buyer tax credit.
Year-to-date there were 4.149 million existing-home sales, down 2.9% from 4.272 million at this time in 2009.
Lawrence Yun, NAR chief economist, said the recent sales pattern can be expected to continue.
"The housing market is experiencing an uneven recovery, and a temporary foreclosure stoppage in some states is likely to have held back a number of completed sales," he said. "Still, sales activity is clearly off the bottom and is attempting to settle into normal sustainable levels."
"Based on current and improving job market conditions, and from attractive affordability conditions, sales should steadily improve to healthier levels of above 5 million by spring of next year," Yun added.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.23% in October from 4.35% in September; the rate was 4.95% in October 2009.
The national median existing-home price for all housing types was $170,500 in October, down 0.9% from October 2009. Distressed homes accounted for 34% of sales in October, compared with 35% in September and 30% of sales in October 2009.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., clarified that several factors are restraining a housing recovery, even with great affordability conditions.
"We'll likely see some impact from the foreclosure moratorium in the months ahead, but overly tight credit is making it difficult for some creditworthy borrowers to qualify for a mortgage, and we are continuing to deal with a notable share of appraisals coming in below a price negotiated between a buyer and seller," he said.
"A return to common sense loan underwriting standards would go a long way toward achieving responsible, sustainable homeownership," he added. "In addition, all home valuations should be made by competent professionals with local expertise and full access to market data. There remains an elevated level of appraisals that fail to provide accurate valuation, which is causing a steady level of sales to be cancelled or postponed."
A parallel NAR practitioner survey shows 10% of Realtors in October report they had a contract cancelled as a result of a low appraisal, and 13% report they had a contract delayed; 16% said a contract was negotiated to a lower sales price as a result of a low appraisal.
According to the Federal Housing Finance Agency (FHFA), Fannie- and Freddie-backed mortgages that were recently originated show an outstanding performance, even better than during the pre-housing bubble years.
"A review of recently originated loans suggests that they have overly stringent underwriting standards, with only the highest creditworthy borrowers able to tap into historically low mortgage interest rates," Yun explained. "There could be an upside surprise to sales activity if credit availability is opened to more qualified home buyers who are willing to stay well within budget."
Total housing inventory at the end of October fell 3.4% to 3.86 million existing homes available for sale, which represents a 10.5-month supply at the current sales pace, down from a 10.6-month supply in September.
First-time buyers purchased 32% of homes in October, unchanged from September, but down from 50% a year ago during the initial surge for the first-time buyer tax credit. Investors, who accounted for 19% of transactions in October, accounted for 18% in September and 14% in October 2009. The balance of sales were to repeat buyers.
All-cash sales were at 29% in October, unchanged from September, but up from 20% a year ago.
Single-family home sales declined 2.0% to a seasonally adjusted annual rate of 3.89 million in October from 3.97 million in September, and are 25.6% below the 5.23 million surge in October 2009. The median existing single-family home price was $171,100 in October, which is 0.5% below a year ago.
Existing condominium and co-op sales fell 3.6% to a seasonally adjusted annual rate of 540,000 in October from 560,000 in September, and are 27.6% below the 746,000-unit sales rush a year ago. The median existing condo price was $166,000 in October, down 4.2% from October 2009.
Regionally, existing-home sales in the West declined 1.9% to an annual level of 1.03 million in October and are 21.4% below the sales rush in October 2009. The median price in the West was $209,300, which is 4.8% below a year ago.
Existing-home sales in the Northeast declined 1.3% to an annual pace of 750,000 in October and are 27.2% below the surge in October 2009. The median price in the Northeast was $240,200, which is 1.9% higher than a year ago.
Existing-home sales in the Midwest slipped 1.1% in October to a level of 940,000 and are 32.4% below the tax credit rush one year ago. The median price in the Midwest was $139,500, down 3.6% from October 2009.
In the South, existing-home sales fell 3.4% to an annual pace of 1.71 million in October and are 24.0% below the year-ago surge. The median price in the South was $148,700, down 0.7% from October 2009.