Sales of existing homes in the US soared in September as buyers capitalised on low house prices and a flood of foreclosures.
Home resales jumped by 10 per cent to an adjusted annual rate of 4.53m from August to September, according to the National Association of Realtors. Although that was a stronger increase than economists were expecting, sales remain off by nearly 20 per cent from a year ago.
“A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium,” said Lawrence Yun, NAR’s chief economist. “But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favourable affordability conditions.”
Several big US banks have implemented foreclosure freezes because of processing flaws. Ben Bernanke, chairman of the Federal Reserve, said on Monday that US bank regulators were investigating “systematic weaknesses” in foreclosure processing.
In September, sales of distressed homes accounted for 35 per cent of all purchases. That was up from 34 per cent the previous month and 29 per cent in the same month a year ago.
With so many homes being sold under distressed conditions, prices continue to face downward pressure. Last month, the median price of a single-family home was $172,600, down 1.9 per cent year-on-year.
Regionally, existing home sales rose across the US with sales strongest in the Midwest, where they were up by 14.5 per cent.
The rise in September sales chipped away at the glut of housing inventory, reducing it by 1.9 per cent to 4.04m. That represents a 10.7-month supply at the current sales rate.
“Inventories are very high relative to sales rates, and would probably be even more so if all those wishing to sell their home actually had the house on the market instead of pulling it off in the face of eroding prices,” said Joshua Shapiro, chief US economist at MFR.
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