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Existing home sales slow down

By Les Christie, staff writer

NEW YORK (CNNMoney.com) -- Following a couple of months of gains, sales of existing homes retreated again in October, an industry report said Tuesday.

The National Association of Realtors reported that the number of homes sold fell 2.2% from September to an annual rate of 4.43 million. The rate was down 25.9% from 12 months earlier.

The report came in just about at expectations. A consensus of experts surveyed by Briefing.com had forecast an annualized sales rate of 4.42 million.

"The housing market is experiencing an uneven recovery," said Lawrence Yun, NAR's chief economist. "Still, sales activity is clearly off the bottom and is attempting to settle into normal sustainable levels."

Home sales have been slow despite some of the best buying conditions in many years: interest rates near 4% for 30-year fixed-rate loans, the most affordable home prices in many years and a wide choice of homes available for house hunters.

The median price of all existing homes sold during the month was $170,500, down 0.9% compared with 12 months earlier. About a third of the market was in distressed properties, repossessed homes and short sales.

Mike Larson, a housing market analyst for Weiss Research, said that positive and negative forces have been offsetting each other, leaving a market in limbo.

"You have low home prices and interest rates on the one hand, but trouble getting financing on the other," he said. "And unemployment remains stubbornly high."

The struggling economy certainly has dampened housing market performance, with unemployment well above 9% nationally. The job outlook seems to have brightened a bit lately.

"Based on current and improving job market conditions, and from attractive affordability conditions, sales should steadily improve to healthier levels of above 5 million by spring of next year," said Yun.

For months now, neither prices nor sales volume have been moving strongly in one direction or another, according to Larson.

"That followed years of the market either being very good or very bad," he said.

There's still fear among buyers, but the market's steadiness has lessened those fears from the first years of the bust.

"Buyers are now afraid that their homes will be worth less a year from now," said Larson. "But during the bust, they were afraid their homes would become worthless."

It may take another shift in perception for markets to really take off again. If homebuyers think their properties will gain in value, that would help propel sales forward.  To top of page

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