Existing home sales, prices continue to fall

Sales of existing homes fell to a seasonally adjusted rate of 4.91 million units in August, down 2.2% from July and 10.7% from a year ago, according to the National Association of Realtors of Chicago. The decline reverses the slight improvement that had been reported in July. However, the data does not reflect the positive effect of the government bailout of Fannie Mae of Washington and Freddie Mac of McLean, Va. that occurred earlier this month. Prices of existing homes also continued their downward spiral. The median price of existing homes in August was $203,100, down 9.5% from a year ago. “Our hope is that overly tight lending criteria can be loosened with reasonable standards and credit so that sales activity can catch up with demand,” Richard Gaylord, president of NAR, said in a statement. But Mr. Gaylord questioned whether a government cash infusion into Wall Street will truly improve mortgage funding for average consumers. “We urge Congress to restore access to sound mortgage credit so people have the ability to make and keep a long-term investment in the American dream of homeownership,” he said. “Congress needs to take care of Main Street and not just bail out Wall Street.” The average rate of a 30-year fixed-rate mortgage rose to 6.48% in August from 6.43% in July, according to Freddie Mac However, rates have been falling since the Government’s takeover of Fannie and Freddie. Last week the average rate was 5.78%. The report found that housing inventory fell 7% to 4.26 million homes for sale in August. Based on the current sales pace, this represents a 10.4 month supply, down from 10.9 months in July.