Sales of existing homes rose in October, but remained stuck at a low level, according to a report released today by the National Association of Realtors, which noted that contract failures played a large role in the stagnant market.
Existing sales increased 1.4 percent from September and 13.5 percent from October 2010 to a seasonally adjusted annual rate of 4.97 million units.
“Home sales have been stuck in a narrow range despite several improving factors that generally lead to higher home sales,” said Lawrence Yun, NAR’s chief economist. “A higher rate of contract failures has held back a sales recovery.”
One third of all NAR members reported contract failures, up from 18 percent in September and 8 percent last October, Yun said.
One of the positive factors is a continued decline in the inventory, which fell 2.2 percent to 3.33 million existing homes, which, at the current sales pace, represents an eight-month supply. Despite the shrinking inventory, median existing home prices also fell 4.7 percent from last October to $162,500 even as foreclosures comprised a smaller percentage of sales than last year.
The Northeast experienced a 5.1 percent drop in existing home sales, and was the only region where volume fell on a month-over-month basis. It also had the smallest improvement over October 2010 at just 1.4 percent, compared to 15 percent year-over-year increases elsewhere in the country. The median price fell 5.5 percent year-over-year in the Northeast, compared to 4.7 percent in the Midwest and 1.6 percent in the South and West. — Adam Fusfeld