Sales of existing homes fell in September, extending a pattern of declines and gains that show the industry continues to be buffeted by consumer pessimism and unemployment above 9 percent.
Purchases dropped 3 percent to a 4.91 million annual rate, matching the median forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. The median price dropped 3.5 percent from a year ago and about one in five real-estate agents polled said contracts had been canceled, the group said.
Growing pessimism about the economy, unemployment above 9 percent and limited access to credit are keeping some Americans from taking advantage of near record-low mortgage rates. Foreclosures that are adding to the supply of homes for sale and driving down prices remain a hurdle for an industry that’s made little progress more than two years after the recession ended.
“Any recovery is going to be long and arduous,” said Anika Khan, an economist at Wells Fargo Securities Inc. in Charlotte, North Carolina. “With cancellations and distressed sales so high, we’ll continue to see downward pressure on prices.”
The median forecast was based on a survey of 78 economists. Estimates ranged from 4.7 million to 5.1 million.
The number of Americans filing claims for unemployment benefits declined last week to a level that shows little improvement in the labor market since the start of the year, a report from the Labor Department showed today. Applications dropped by 6,000 to 403,000 in the week ended Oct. 15. Claims had been as low as 375,000 in February, the month employers added 235,000 workers to payrolls.
Other reports showed manufacturing in the Philadelphia region unexpectedly expanded in October and the index of leading economic indicators rose 0.2 percent last month.
Stocks fell on concern over European debt talks. The Standard & Poor’s 500 Index decreased 0.5 percent to 1,203.31 at 11:55 a.m. in New York.
The median price of a previously owned home fell to $165,400 from $171,400 in September 2010, today’s report showed.
Existing-home sales, tabulated when a contract closes, rose 15 percent from the same month last year before adjusting for seasonal variations. Total sales in 2010 were 4.91 million, compared with a peak of 7.07 million in 2005 during the housing boom.
The number of previously owned homes on the market fell 2 percent to 3.48 million. At the current sales pace, it would take 8.5 months to sell those houses, up from 8.4 months at the end of the prior month.
Month’s supply in the seven months to eight months range is consistent with stable home prices, the group said.
The market “is in a holding pattern,” Lawrence Yun, the group’s chief economist, said in press conference.
Contract cancelations were reported by 18 percent of the group’s members in September, the same as in the prior month. The level is at least twice as high as under normal circumstances, said Yun. The cancelations reflected mortgage applications that were refused or because appraised home values were coming in below the sales price, the group said.
The agents group’s annual effort to benchmark its sales data is “taking longer” than originally estimated, said Yun. He said courthouse data on sales that the NAR was reviewing was “messy” due to double-counting in some cases and “fuzzy” documentation. “I think it will be a measurable downward revision,” he said. “All the factors are indicating there is an over-count.” At the earliest, he said, the results would be announced “possibly within a month.”
Sales of existing single-family homes decreased 3.6 percent to an annual rate of 4.33 million. Purchases of multifamily properties, including condominiums and townhouses, climbed 1.8 percent to a 580,000 pace.
Purchases dropped in three of four regions, led by an 8.8 percent decrease in the West. The West is probably the area most affected by the recent reduction in conforming loan limits, Yun said. Sales in the Northeast gained 2.6 percent, perhaps reflecting a rebound from Hurricane Irene, he said.
A glut of distressed properties on the market is holding down prices, keeping housing from contributing to the economic rebound. Unemployment has been 9.1 percent for the last three months, wages are stagnate and stock prices have dropped this year on concerns about a European sovereign debt default and recession.
Scottsdale, Arizona-based Meritage Homes Corp., which builds energy-efficient single-family homes, saw its sales in the quarter ended in September rise from a year earlier even as demand remains at “depressed levels,” executive vice president Brent Anderson said on an Oct. 12 conference call.
“We need to have more people in jobs, good, well-paying, full-time jobs,” Anderson said. “It’s really a matter of confidence.”