September existing-home sales plummet

October 25, 2007|Associated Press

WASHINGTON - Sales of existing homes plunged a record amount in September while median home prices dropped by the largest amount in nearly a year, reflecting deepening problems in the troubled housing market.

Analysts said the current downturn is already more severe than the housing slump of the 1990s and they predicted before it is resolved it will rival the 1980-82 housing slump when the industry was battered by double-digit mortgage rates and a steep economic downturn.

The National Association of Realtors reported yesterday that sales of existing homes fell 8 percent in September, the largest decline in records dating to 1999. The seasonally adjusted annual sales rate of 5.04 million existing homes was also the slowest pace on record.

The median price fell to $211,700 in September, down by 4.2 percent from the sales price a year ago. It was the biggest price drop since last October and marked the 13th time in the past 14 months the year-over-year sales price has decreased.

Problems in housing worsened in September following a severe credit crunch that hit in August as banks and other lenders tightened standards in the face of soaring mortgage defaults. The market all but dried up for subprime borrowers, those with weak credit histories, and people seeking so-called jumbo loans over $417,000.

Many economists said the problems in housing could well last for another year, given record-high levels of unsold new and existing homes.