Existing home sales rise, contracting issues prevent full rebound

Existing home sales increased 13.5% in October when compared to a year earlier and would be even higher if contract failures and cancellations plaguing the loan application process could subside, the National Association of Realtors said Monday. Total existing home sales — including single-family townhomes, condominiums and co-ops — rose to a seasonally adjusted annual rate of 4.97 million units in October, compared to 4.9 million in September and 4.38 million a year earlier. “Home sales have been stuck in a narrow range despite several improving factors that generally lead to higher home sales such as job creation, rising rents and high affordability conditions,” said Lawrence Yun, NAR’s chief economist. “Many people who are attempting to buy homes are thwarted in the process.” Yun said the rebound in home sales would be more pronounced if it were not for the number of contract failures reported in October. Overall, mortgage application failures driven by appraisal value issues, home inspection problems and employment losses pushed the contract failure rate to 33%, compared to 18% in September and 8% a year earlier. “Other recent factors include disruption in the National Flood Insurance Program, and lower loan limits for conventional mortgages, which paradoxically force some of the most creditworthy consumers to pay unnecessarily higher interest rates,” Yun said. The good news, according to NAR, is the fact that the supply of homes is gradually subsiding. In October, the total existing inventory fell 2.2% to 3.33 million housing units, or an eight-month supply.  That is down slightly from an 8.3-month supply in September. The national median existing home sales price hit $162,500 in October, down 4.7% from a year earlier. Write to Kerri Panchuk.