–Inventories Decline Slightly to 10.7 Months’ Supply
–NAR Marks Down 2010 Forecast Slightly to 4.8M to 4.9M Total Sales
–NAR Says Survey Shows Foreclosure Mess Holding Up Some Sales

By Denny Gulino and Ian McKendry

WASHINGTON (MNI) – U.S. sales of existing single-family homes, town
homes, condominiums and cooperatives rose 10.0% to a 4.53 million sale
annual rate, another month of a “solid recovery” as the housing market
continues to heal on its own without a government tax credit, the
National Association of Realtors reported Monday morning.

August sales were revised downward only slightly, to a 4.12 million
annual rate after seasonal adjustment. Despite the above-expectations
result, the NAR is marking down its forecast for the entire year’s sales
slightly to 4.8 million to 4.9 million, not the 5 million previously
seen.

But a new threat, that of any widespread halt to sales of
foreclosed residences because of documentation problems, may already be
causing about a fifth of would-be buyers to hold off purchases, NAR
Chief Economist Lawrence Yun told reporters a new survey suggests. A
governmental moratorium or even a court order could take the 20% of the
market composed of foreclosed homes “off the market,” he said.

Earlier in the morning, Federal Reserve Chairman Ben Bernanke began
his welcoming remarks at an FDIC housing conference saying the Fed has
“been concerned about reported irregularities in foreclosure practices
at a number of large financial institutions” and federal banking
agencies are cooperating in “an in-depth review of practices.”

Bank of America, which resumed processing more than 100,000
foreclosures last week, has acknowledged some continuing problems which
the bank says are being repaired as the foreclosures are moved forward
and that no foreclosures have been shown to be unjustified.

Existing homes available for sale represented 10.2 months of supply
at September’s rate of sales, a number that bounces around as the sales
pace varies. A year ago there were eight months worth of supply on hand.
The September level of unsold homes, at 4.04 million, has stayed about
the same for several months, Yun said.

Last year at this time the inventory of unsold homes was also about
4 million and then moved down to 3.2 million into the winter, a seasonal
decline Yun said he is closely monitoring to see if it repeats.

The NAR report showed September sales up in all four major regions,
up 10.1% in the Northeast, 14.5% in the Midwest, 10.6% in the South and
5.0% in the West.

The national median price in September was $171,700, down 2.4% from
a year earlier. Prices were down versus a year earlier in all four
regions, with the 5.2% drop in the midwest the largest decline.

The 4.53 million annual rate of sales in September was 19.1% lower
than a year earlier but a huge improvement over July, when sales hit a
15-year low at a 3.84 million pace following the end of the tax credit
incentive.

Single-family home sales rose 10.0% in September and condo sales
rose 9.8%, but the inventory figure differed significantly, with
single-family units having 10.2 months of supply and condos 14.0 months.

Yun said he saw September as a “second straight month of solid
increase, coming off exceptionally low figures” following the end of the
federal tax credit. There’s a “natural healing process without that
stimulus medicine” taking place,” he said.

However, he added he does not see the fourth quarter quite as
strong as he earlier hoped so no longer sees the year as a whole
reaching 5 million sales. Instead it looks to be a 4.8 million to 4.9
million sales year, he said.

Sales of so-called distressed homes were 35% of the September
total, showing “a slight upward tick,” he said. That proportion was 34%
in August and back in May was 31%. But he said there was no “major
upward trend.”

Purchases of foreclosed houses in September were 23% of the total
and short sales 12%.

He said he is “very concerned” about any kind of foreclosure
moratorium, whether government mandated or the result of a court order
somewhere. That would be 20% of the homes off the market,” he said.

A survey of about 2,000 members two weeks ago, he said, shows
buyers already “becoming hesitant” because of the widely publicized
problems with foreclosure documentation and transactions. Twenty-three
percent of NAR members report “having a client no longer interested in
buying” because of the problems.

First-time buyers made up 32% of the September total, up from
August’s 31%. When the tax credit was still available that number was
40% to 50%.

With mortgage rates at their historical lows, making the
median mortgage payment several hundred dollars less than five years ago
and the price of a house averaging about 22% less than five years ago,
home ownership in many parts of the country is now cheaper than renting,
NAR President Vicki Cox Golder was quoted as saying in the NAR report.

Despite that affordability equation home sales are still running
way behind their level of 5.7 million in 2007 before the full force of
the financial crisis hit.

** Market News International Washington Bureau: 202-371-2121 **

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