Home Sales Fall 12% Nationwide
Sales of existing homes nationwide tumbled almost 12% in September, the biggest monthly drop in more than six years and well below expectations, a real estate trade group reported Thursday.
The falloff was only partly attributed to the terrorist attacks, suggesting that the housing market was unraveling even before the events of Sept. 11 brought sales to a virtual halt in their immediate aftermath. The sales decline was particularly pronounced in the Northeast and California.
David Lereah, chief economist for the National Assn. of Realtors, said more recent surveys of real estate agents nationwide show that activity has bounced back to 95% of its level before the attacks. “Compared to the rest of the economy, housing is still healthy,” he said.
Still, analysts are expecting the full effects of last month’s attacks to show up in the next several months. New mortgage applications have been declining in recent weeks, even while refinancings have picked up steam as interest rates have edged down. The average 30-year fixed-rate mortgage stood at 6.64% this week, compared with 7.68% a year ago, according to secondary mortgage lender Freddie Mac.
The Realtors’ report said sales in September dropped to an annual pace of 4.89 million units, down from an upwardly revised 5.54-million-unit rate in August, which was an all-time high. The 11.7% monthly decline was the largest since a 12.5% drop in April 1995.
Nationally, resale home prices declined 3.6% from August to a median of $148,100 in September. That was still 4.6% higher than September a year ago.
By region, the Northeast saw the biggest drop in the median home price last month, down 13% from August, and resales, which slid 14%. Sales in the West fell 12%.
A separate report Thursday by the California Assn. of Realtors showed sales in the state dropped more sharply than previously thought.
The CAR report said resales plunged almost 17% between August and September to an annual rate of 475,380 units, dragged down by huge declines in pricey markets such as Santa Clara, Santa Barbara and San Francisco counties.
“I was surprised that the drop was as large as it was,” said Leslie Appleton-Young, CAR’s chief economist. “But there’s been a change in the world, a change in how people are living and operating and thinking and that’s being reflected in everything, including the housing market.”
The median price of single-family houses sold in California last month was $276,960--essentially unchanged from August and more than 12% higher than September of a year ago. Appleton-Young attributed the strong run-up in home prices to the state’s “chronic shortage” of affordable housing.
CAR’s latest report showed that sales and prices in Southern California were generally holding up well compared with other regions.
Statewide, sales dropped the most last month in Santa Clara County, falling 38% from a year ago. But the median price in that county, home to Silicon Valley, was unchanged from a year ago, at $500,000.
Lereah, NAR’s economist, said that despite the bigger-than-expected drop-off in sales, he was sticking to his forecast for a relatively short slump in the housing market. He said the housing market fundamentals remain solid, with lean inventory levels and very low mortgage rates.
Sung Won Sohn, chief economist at Wells Fargo Bank in Minneapolis, said moderate and entry-level home sales remain strong in many parts of the United States and in Southern California, with potential buyers outnumbering availability of homes.
Michael Dilsaver, an agent at Jim Dickson Realtors in Pasadena, said while owners of luxury homes are taking their properties off the market because of weak demand, sellers of some lower-priced homes are continuing to draw multiple bids.
