Home Sales Fall 19% From September to October

Stress in the real estate market caused U.S. home sales to fall sharply between September and October, according to a national survey of more than 2,500 real estate agents conducted by survey firm Campbell Communications Inc. in early November. Survey results released Thursday showed buy-side respondents indicated a 19 percent drop in completed transactions through September, representing an unusual variation so severe it can’t be associated with seasonality, analysts said in a media statement regarding the survey. Declines were especially severe for sales of non-distressed properties in states where home prices have fallen rapidly during the past year, according to the statement. Buy-side agents indicated a 22 percent decline in non-distressed sales in Florida, a 32 percent drop in California and a 51 percent drop in Michigan. Declines in sales of real estate-owned (REO) properties were less severe. Buy-side agents reported a month-to-month 14 percent drop in sales of REO properties nationwide; from a 3 percent drop in California to a 10 percent drop in Michigan. Buy-side survey respondents in Florida, on the other hand, indicated an 8 percent increase in REO sales. Real estate agents indicated that approximately one-quarter of signed purchase and sale agreements were canceled due to either a lack of financing or an inability of homebuyers to sell their current residences. Major reasons for denied mortgage financing were credit score and lack of down payment. Real estate agents also indicated that many home sellers are unrealistic about the value of their homes, pricing them well above competing REO properties. Survey results show that a substantial portion of properties listed by individuals are being taken off the market without sale. A majority of real estate agents responding to the survey specified “fear of falling prices” as a major impediment to people buying listed homes, according to Campbell’s survey. “We can now see the effect of the recent credit crunch and associated media attention on home sales,” said Thomas Popik, designer of Campbell’s survey instrument, in a press release. “The effect is especially severe in states where home prices are rapidly declining or where the job market is uncertain. Agents tell us that many homebuyers have adopted a ‘wait and see’ attitude. Agents also say large numbers of potential home sellers remain in denial about the true value of their homes or are prevented from selling when the mortgage is greater than the market value of the home.” The drop in home sales as indicated by real estate agents coincides with the drop in mortgage application volume reported by the Mortgage Bankers Association and Mortgage Maxx LLC at the end of September. Mortgage applications have teetered back and forth since then. A recent boost in application volume in the week ended Nov. 7, as reported Thursday by the MBA, might signal a change to come in this downward trend of home sales. Write to Diana Golobay at diana.golobay@housingwire.com.