WASHINGTON -- The number of Americans who bought previously occupied homes fell in September. Home sales are on pace to match last year's dismal figures -- the worst in 13 years.
The National Association of Realtors said Thursday that home sales fell 3 percent last month to a seasonally adjusted annual rate of 4.91 million homes. That's below the 6 million that economists say is consistent with a healthy housing market.
The housing market has been hobbled by foreclosures, weak demand and falling home prices. Last year 4.91 million previously occupied homes were sold, the lowest level since 1997.
Homes at risk of foreclosure edged down to 30 percent of sales, from 31 percent in August. Many of the sales went to investors, who are buying homes under $100,000. First-time homebuyers, critical to a housing recovery, were unchanged at 32 percent of all sales.
Many people are reluctant to purchase a home more than two years after the recession officially ended. Even the lowest mortgage rates in history haven't been enough to lift sales.
Some can't qualify for loans or meet higher down payment requirements. Many with good credit and stable jobs are holding off because they fear that home prices will keep falling.
Home sales are also being hurt by a steep decline in first-time buyers. First-time buyers are critical because their purchases of low and moderately priced homes allow sellers to move up to more expensive homes.
Most economists say home prices will keep falling, by at least 5 percent, through the rest of the year. Many forecasts don't anticipate a rebound in prices until at least 2013.
The Obama administration is trying to expand a program that allows homeowners to refinance their mortgages. But economists say that will do little to help the depressed housing market.
Wealthy buyers are still purchasing homes priced at more than $1 million in the affluent Northeast and growing Midwest. And investors are scooping up dirt-cheap homes in the battered South and West for less than $100,000. They are specifically targeting foreclosures in hard-hit areas, such as Phoenix, Las Vegas and Tampa, Fla.
Foreclosures and short sales -- when a lender agrees to sell for less than what is owed on a mortgage -- have made up a larger portion of home sales. Those homes, which sell at an average 20 percent discount, drag down all home prices and hurt sales.
The high rate of foreclosures has made re-sold homes much cheaper than new homes. The median price of a new home is now roughly 30 percent higher than the price for a previously occupied home -- almost twice the normal markup.
Even homes that are under contract and near closing are falling apart at the last minute. The Realtors' group has noted an increasing number of deals have been canceled because appraisals came in below a negotiated price.
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