U.S. home sales reach a new low in September

The U.S. housing market took a sharp turn for the worse in September as prices tumbled and sales of previously owned homes fell to a record low, battered by rising foreclosures and tighter lending standards.

Sales of existing homes dropped 8% to a 5.04-million-unit annual pace in September -- the lowest on record dating to 1999, the National Assn. of Realtors said Wednesday.

The drop, from a downwardly revised 5.48-million rate in August, was steeper than Wall Street had expected and pushed inventory to record levels.

The national median price for existing single-family homes and condominiums dropped 4.2% from a year ago to $211,700 and was down 5.7% from August.

“It is clearly well below expectations and it is also interesting that prices have declined sharply on a month-to-month and year-on-year basis,” said David Sloan, an economist with 4Cast Ltd. in New York. “The question was, is the housing decline going to continue at this pace or even moderate or accelerate? This suggests that the decline is accelerating and that the downside risk is certainly significant.”

The realty trade group pinned September’s sales weakness on a tightening of credit in August, which was sparked by concerns about rising foreclosures on sub-prime mortgages extended to borrowers with spotty borrowing histories.

“Mortgage problems were peaking back in August when many of the September closings were being negotiated, and that slowed sales notably in higher-priced areas that rely more on jumbo loans,” said Realtors association economist Lawrence Yun, adding that mortgage availability had improved in recent weeks.

The slower pace of existing-homes sales -- both single-family homes and condominiums -- helped drive up the inventory of unsold homes on the market by 0.4% to 4.4 million last month. That marks a 10 1/2 -month supply at the September sales pace, the highest since the association began combining sales of single-family homes and condos in 1999.

Single-family home sales fell 8.6% in September to a 4.38-million-unit annual pace -- close to a 10-year low -- from 4.79 million in August.

Sales were down in all regions, the association said.

A separate report Wednesday showed that U.S. mortgage applications edged up only marginally last week even as interest rates sank to their lowest levels since May.

The Mortgage Bankers Assn. said its index of mortgage applications, which includes purchase and refinance loans, crept up 0.03% to 656.5 in the week ended Oct. 19. The slight gain reflected the difficulty borrowers had getting a loan in the face of tightened lending standards.

Prospective borrowers have been filing multiple applications to obtain a single loan, which economists say has skewed mortgage application data in recent months. That could explain why those applications last week were 11.5% above their year-earlier level, even though home sales were down sharply.