WASHINGTON – Sept. 24, 2008 – Existing-home sales were down in August following a healthy gain in July as tight mortgage credit curtailed activity, according to the National Association of Realtors (NAR). Sales rose in the Midwest and South but fell in the Northeast and West.

Nationally, existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 2.2% to a seasonally adjusted annual rate of 4.91 million units in August from an upwardly revised pace of 5.02 million in July, but are 10.7% below the 5.50 million-unit pace in August 2007.

NAR President Richard F. Gaylord said the pendulum in the mortgage market has swung too far. “The difficulty in obtaining a mortgage increased over the past couple months, making it more challenging for creditworthy borrowers to find financing,” he said. “Our hope is that overly-tight lending criteria can be loosened with reasonable standards and credit so that sales activity can catch up with demand. Interest rates have already declined, but there is a serious question as to whether a cash infusion by the U.S. Treasury into Wall Street would help consumers by improving mortgage funding.

“We urge Congress to restore access to sound mortgage credit so people have the ability to make and keep a long-term investment in the American dream of homeownership. Congress needs to take care of Main Street and not just bail out Wall Street.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 6.48 % in August from 6.43% in July; the rate was 6.57% in August 2007. However, last week the 30-year fixed had dropped to 5.78%.

Lawrence Yun, NAR chief economist, said the recent drop in interest rates is the immediate impact of recent government action. “August sales reflect higher interest rates before the government takeover of Freddie Mac and Fannie Mae, and the sudden drop in mortgage interest rates over the past couple weeks is improving housing affordability,” he said. “With higher loan limits and a beefing up of the FHA program, all the mechanisms have been falling into place to increase mortgage availability.

“However, home sales will be constrained without a freer flow of credit into the mortgage market. The faster that happens, the sooner we’ll see a broad stabilization in home prices that in turn will help the economy recover,” Yun said. “Historically, housing has led the nation out of economic doldrums – there will not be an economic recovery without a housing recovery.”

The national median existing-home price for all housing types was $203,100 in August, down 9.5% from a year ago when the median was $224,400.

“The median home price reflects more transactions related to subprime loans,” Yun said. “Fewer than 10% of homeowners have subprime loans, but these mortgages are accounting for a disproportionately high share of sales in the current market. On the other hand, areas that have had sharp price cuts are seeing a turnaround in sales, which are rising very fast now in parts of California, Florida and Nevada.”

Total housing inventory at the end of August fell 7.0% to 4.26 million existing homes available for sale, which represents a 10.4-month supply at the current sales pace, down from a revised 10.9-month supply in July.

Single-family home sales slipped 1.4% to a seasonally adjusted annual rate of 4.35 million in August from an upwardly revised pace of 4.41 million in July, but are 9.6% below the 4.81 million-unit level a year ago. The median existing single-family home price was $201,900 in August, down 9.7% from August 2007.

Existing condominium and co-op sales dropped 8.2% to a seasonally adjusted annual rate of 560,000 units in August from an upwardly revised level of 610,000 in July, and are 19.0% below the 691,000-unit pace in August 2007. The median existing condo price was $212,600 in August, which is 7.2% below a year ago.

Regionally, existing-home sales in the Midwest rose 0.9% in August to a pace of 1.14 million but are 12.3% below August 2007. The median price in the Midwest was $168,000, down 5.6% from a year ago.

In the South, existing-home sales increased 0.5% to an annual pace of 1.86 million in August, but are 15.1% below a year ago. The median price in the South was $176,500, which is 3.4% lower than August 2007.

Existing-home sales in the West fell 5.3% to an annual rate of 1.07 million in August, but are 4.9% higher than August 2007. The median price in the West was $251,600, down 23.9% from a year ago. “The highest concentration of foreclosures is in the West, which is weighing down the median price because many buyers are taking advantage of deeply discounted prices,” Yun said.

In the Northeast, existing-home sales dropped 6.6% to an annual pace of 850,000 in August, and are 15.0% below a year ago. The median price in the Northeast was $271,000, down 3.8% from August 2007.


Source:  FAR