Existing home sales fell 4.7 percent in October to their lowest level in nearly six years, a real estate trade group said this week.
The National Association of Realtors said house resales totaled a seasonally adjusted annual rate of 3.02 million, compared with 3.17 million in September. It was the lowest sales rate since February 1985, when it dropped to 2.95 million.
Reports of persistent budget deficit woes, general economic sluggishness nationwide and the threat of war against Iraq have created psychological barriers that are blocking home purchases, according to Harley E. Rouda, NAR's president.
Mortgage interest rates, which had been blamed for weak sales in previous months, have remained relatively stable, Rouda noted. He said the Federal Home Loan Mortgage Corp. (Freddie Mac) reported the average rate for a 30-year, conventional fixed-rate mortgage ranged between 10.08 percent and 10.17 percent during October.
Rouda said the current rates are in marked contrast to the last home-buying slump in 1982, when rates ranged between 16 percent and 18 percent. And, he added, despite tight credit rules for commercial developers, mortgage funds are plentiful for home buyers.
At the same time, the group said the median price of an existing home was $92,800 in October, down 1.7 percent from September.
In the Northeast, the resale pace was 470,000 units, 9.6 percent below the September rate. The median price was $136,200, down 0.7 percent from the previous month.
Sales in the West totaled 490,000 in October, down 5.8 percent from the previous month. The median price there was $140,600, 4.4 percent higher than in September.
In the Midwest, sales were off 5.7 percent, to an annual rate of 820,000 units, while the median price fell 2.8 percent to $72,100.
Sales in the South totaled 1.23 million, down 2.4 percent from September. The median price dropped 2.9 percent, to $83,400.
The group said sales of existing homes are expected to total 3.33 million units this year, down 4.1 percent from 1989's 3.44 million.