21 November 2011 16:20 [Source: ICIS news]
WASHINGTON (ICIS)--US sales of existing homes rose by 1.4% in October from September, the National Association of Realtors (NAR) said on Monday, offsetting some of the 3% decline seen in September but still below normal.
The association said that sales of existing homes in October were at a seasonally adjusted annual pace of 4.97m units, an improvement from the downwardly revised September figure of 4.90m (originally reported as 4.91m).
September’s 3% decline followed a strong 7.7% advance in August, and the 1.4% gain reported now for October represents another upward turn.
But NAR chief economist Lawrence Yun said that while the October gain was welcomed, the market continues to bump along at a lower than desired level.
In normal times, US existing home sales would be in the range of 6m annually. During the housing boom years of 2003-2006, existing home sales were at and even above 7m units annually.
“Home sales have been stuck in a narrow range despite several improving factors that generally lead to higher home sales,” Yun said.
He said that recent modest improvements in the ?xml:namespace>
That surge in home buying is not developing as hoped, Yun said, because of ongoing problems with tight lending terms among mortgage lenders and low appraisal figures.
The result is that a lot of would-be home buying deals are falling apart because the buyer cannot meet a bank's high down-payment and credit terms, or because the home being purchased is appraised at a dollar value below that of the agreed purchase price, which causes the lender to back away from the transaction.
On the positive side, NAR said that there is steady decline in the number of existing homes on the market.
“Total housing inventory at the end of October fell 2.2% to 3.33m existing homes for sale, which represents an 8-month supply at the current sales pace,” the association said.
There was an inventory supply of 8.3 months in September.
The association said that inventory levels of unsold existing homes have been trending down since setting a record of 4.58m in July 2008.
Improvements in the sale of existing homes comes amid a mix of recent US housing data, including a slight decline in new home construction in October, an upturn in home builders’ market confidence this month, and a renewed pace of home foreclosures in October.
The housing market is a key downstream consuming sector for the
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