Sales of previously owned homes fall in September

Sales of previously owned homes fell 3% in September, reflecting continued tough times in the housing market as well as newly imposed tougher loan limits, a trade group said Thursday.

The National Assn. of Realtors said sales fell to a seasonally adjusted annual rate of 4.91 million, in line with expectations. August data were revised higher to 5.06 million from an initially reported 5.03 million.

Compared with September 2010 — a time when the expiration of the home-buyer tax credit was still afflicting the market — sales grew 11.3%.

The cancellation rate was still high; 18% of real estate agents reported at least one.

Tougher conforming jumbo loan limit rules went into effect in October, and a separate survey of about 1,300 real estate agents in areas that experienced lower loan limits showed that 16% of buyers dropped out of the home buying process.

“People going from a 3.5% down payment to 20%, those are sizable,” said Lawrence Yun, chief economist of the Realtors group. Yun said that may have played out in the West in particular, where sales of previously occupied homes dropped 8.8%.

The National Assn. of Realtors forecasts 4.9 million units will be sold this year — down precipitously from the 2005 peak of 7.08 million.

The median price of homes dropped 3.5% from year-ago levels to $165,400. The price gap between new and previously owned homes was about $40,000 in August.

Distressed homes accounted for 30% of the market for previously owned homes in September compared with 31% in August, with foreclosures accounting for 18% of the market.

Goldstein writes for MarketWatch.com/McClatchy.