Home Sales Continue Slump, Along With Prices

Washington, DC, November 28, 2007 — U.S. existing home sales dropped 1.2% and prices posted a record slump in October as the woes of the housing sector persisted, according to the National Association of Realtors.

The trade groups said sales of existing single-family homes and apartments fell to a seasonally adjusted rate of 4.97 million units in October from a downwardly revised 5.03-million unit pace in September.

The decline was worse than economists' consensus forecast of a drop to 5 million units, and followed an 8.0% drop in home sales in September.

On a 12-month basis, sales in October were down 20.7% from the pace of a year ago.

The national median home price fell to $207,800, down 5.1% from October 2006 and the largest drop recorded by the NAR.

Lawrence Yun, NAR chief economist, said the weak performance reflected past credit tightening, but that the mortgage situation has since improved.

"As noted last month, temporary mortgage problems were peaking back in August when many of the sales closed in October were being negotiated. We continue to see the biggest impact in high-cost markets that rely on jumbo loans," he said, referring to homes priced $417,000 and up.

"Mortgage availability has improved as evidenced by much lower mortgage interest rates and a sharp jump in FHA (Federal Housing Administration) endorsements for home purchases," Yun said.

The glut of existing homes for sale rose 1.9% in October to 4.45 million units, which represents a 10.8-month supply at the current sales pace, the highest monthly supply on record since the group started tracking this data in 1999.