Existing home sales tumble
October decline is worse than expected as economic conditions keep buyers out of the market.
NEW YORK (CNNMoney.com) -- Sales of existing homes fell in October and prices continued to decline as potential buyers remain sidelined by the weak economy, according to a real estate group's report issued Monday.
The National Association of Realtors reported that sales by homeowners slid in October to an annual pace of 4.98 million. That was down 3.1% from September's revised reading of 5.14 million.
Economists surveyed by Briefing.com were expecting sales to have declined to an annual rate of 5.05 million in October.
On a year-over-year basis, sales were down 1.6%.
"Many potential homebuyers appear to have withdrawn from the market due to the stock-market collapse and deteriorating economic conditions," said Lawrence Yun, NAR chief economist, in a statement.
The national median existing-home price in October was $183,300, down 11.3% from a year ago when the median was $206,700. In September, the median existing-home price was $191,400.
October's median existing-home price was the lowest since March 2004, when it stood at $183,200. That means that homeowners who has lived in their homes for 4-1/2 years are seeing their homes worth the same or less as when they bought them.
Home prices were pushed down by a large number of foreclosures and distress sales, which distorts the comparison to last year's October median price, said NAR spokesman Walter Molony.
"About 45% of all sales in October were distressed sales," Molony said.
Still, falling home prices suggest that the market is moving toward "price equilibrium," Molony said, though he added that the market still needs to work through a large number of properties for sale.
Total housing inventory at the end of October eased 0.9% to 4.23 million existing homes, according to the report. At the current sales pace, that represents a 10.2 months of supply, which was up from the 10-month supply in September.
Sales declined nationwide on a monthly basis. But sales in the West rose 37.5% over year-ago levels, suggesting that some buyers are taking advantage of distressed sales in overbuilt areas in California and Nevada.
Foreclosures have been steadily increasing as the economy deteriorates and unemployment rises.
A report out earlier this month showed that foreclosure filings increased 5% in October. RealtyTrac, an online marketplace for foreclosures, said 84,868 homes were lost to foreclosure last month.
"The private market is still very weak indeed, and the next few months represent a severe test in the wake of the plunge in stocks and consumer confidence," said Ian Shepherdson, chief economist at High Frequency Economics.