Home sales declined in October after climbing for two straight months, according to the National Association of Realtors. Existing home sales are also nearly 26% below the pace a year ago when the federal tax credit was in effect.
Sales on residential properties declined to a seasonally adjusted rate of 4.43-million for the month, a drop of more than 100,000 homes, condos and townhouses. The temporary freeze on foreclosures by four major national lenders in 23 states contributed to the decline along with high unemployment, which has maintained its highest levels for longer than during any other recession. First-time buyers purchased 32% of homes during the month.
“The housing market is experiencing an uneven recovery,” said chief National Association of Realtors economist Lawrence Yun, who is hopeful existing home sales will improve during 2011. “Based on current and improving job market conditions, and from attractive affordability conditions, sales should steadily improve to healthier levels of above 5 million by spring of next year,” said Yun.
A 30-year fixed-rate mortgage fell to a record low 4.23% in October from 4.35% in September, according to Freddie Mac. Existing home sales retreated in October on the heels of two strong monthly gains. Despite the moratorium by some lenders, foreclosure sales are still climbing. Distressed homes, including foreclosures and bank assisted short sales accounted for 34% of sales compared to 35% in September.
“A return to common sense loan underwriting standards would go a long way toward achieving responsible, sustainable homeownership,” said NAR President Ron Phipps. The association president says that appraisal problems are hurting the industry. “All home valuations should be made by competent professionals with local expertise and full access to market data. There remains an elevated level of appraisals that fail to provide accurate valuation, which is causing a steady level of sales to be cancelled or postponed.”
An NAR survey conducted in October shows 10% of Realtors® report they had a contract cancelled as a result of a low appraisal, and 13% said they had a contract delayed. Another 16% of transactions were negotiated to a lower sales price as a result of a low appraisal.