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Last Update: 20-Oct-11 10:41 ET
Home Sales Fall in September
Existing home sales fell from an upwardly revised 5.06 mln (from 5.03 mln) in August to 4.91 mln in September and were in-line with the Briefing.com consensus estimate.
The drop in sales was due partially to the lowering of conventional loan limits. Conventional loan limits had been boosted in an effort to lower interest rates for homes that had been previously classified as needing jumbo loans. The increased conforming loan limit, however, expired at the end of September.
Many buyers were concerned that they would not close on their home before the limits expired. This caused a surge in sales in August that tallied off in September. With the lower limits now active, sales in areas that contain a large number of relatively expensive homes -- such as California -- will most likely remain depressed.
The adverse weather conditions from Hurricane Irene were influential in boosting sales in the Northeast. Many buyers were unable to close in August, which pushed sales into September. This is an artificial increase and will weaken in October.
Even without these extraordinary factors, the housing sector isn’t showing any signs of positive traction.
With the exception of the positive boost from Hurricane Irene in the Northeast, every U.S. region saw sales decline.
Contract cancelations, mostly due to bank required appraisals being lower than the agreed upon price, were reported by 18% of NAR members in September. That was unchanged from August levels but is more than twice as high as normal selling periods.
Inventory levels increased modestly from 8.4 months in August to 8.5 months in September.
The median home price fell 3.5% y/y to $165,400.
The drop in sales was due partially to the lowering of conventional loan limits. Conventional loan limits had been boosted in an effort to lower interest rates for homes that had been previously classified as needing jumbo loans. The increased conforming loan limit, however, expired at the end of September.
Many buyers were concerned that they would not close on their home before the limits expired. This caused a surge in sales in August that tallied off in September. With the lower limits now active, sales in areas that contain a large number of relatively expensive homes -- such as California -- will most likely remain depressed.
The adverse weather conditions from Hurricane Irene were influential in boosting sales in the Northeast. Many buyers were unable to close in August, which pushed sales into September. This is an artificial increase and will weaken in October.
Even without these extraordinary factors, the housing sector isn’t showing any signs of positive traction.
With the exception of the positive boost from Hurricane Irene in the Northeast, every U.S. region saw sales decline.
Contract cancelations, mostly due to bank required appraisals being lower than the agreed upon price, were reported by 18% of NAR members in September. That was unchanged from August levels but is more than twice as high as normal selling periods.
Inventory levels increased modestly from 8.4 months in August to 8.5 months in September.
The median home price fell 3.5% y/y to $165,400.
