US existing home sales fall 3.1% in October

24 November 2008 17:45  [Source: ICIS news]

HOUSTON (ICIS news)--Existing US home sales in October fell 3.1% from the previous month amid worsening economic conditions, the National Association of Realtors (NAR) said on Monday.

The US housing industry is a crucial downstream consuming sector for a broad range of chemicals and chemical-derived products.

Existing-home sales - including single-family, townhomes, condominiums and co-ops - fell to a seasonally adjusted annual rate of 4.98m from 5.14m units in September, the association said.

October’s numbers were 1.6% down from the 5.06m-unit level in October 2007, the association said.

The national median existing-home price for all housing types was $183,300 in October, down by a record 11.3% from a year ago when the median was $206,700.

“There remains a significant downward distortion in the current price from a large number of distress sales at discounted prices; the median is where half of the homes sold for more and half sold for less,” the NAR said.

The fall in the price median was a reflection of 45% of home sales being from mortgage foreclosures, said NAR spokesman Walter Molony.

“Many potential home buyers appear to have withdrawn from the market due to the stock market collapse and deteriorating economic conditions,” NAR chief economist Lawrence Yun said.

“We have favourable affordability conditions, but we need more than that to give buyers with jobs the confidence they need,” Yun said.

“This is why a housing stimulus is so critical now to encourage more buyers to draw down the inventory and stabilise home prices. Without home price stabilisation, there will not be an economic recovery.”

Molony said prices were expected to stabilise in the middle of next year.

Total housing inventory at the end of October was 4.23m existing homes available for sale, which represents a 10.2-month supply at the current sales pace, up from a 10.0-month supply in September.

Molony said a six-seven-month supply represents a balance between buyers and sellers.

US Treasury secretary Henry Paulson was considering new programmes in response to worsening market conditions, including making it easier for households to borrow money and reducing the burden of foreclosures on homeowners, according to the Wall Street Journal.

($1 = €0.79)

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