WASHINGTON - Existing home sales fell in September but remained robust as declining mortgage rates continued to attract homebuyers, the National Association of Realtors said Wednesday.
Sales of previously owned homes fell 2.7% in September, to a 5.14 million annual rate. In August, sales rose a revised 9.5%, to 5.28 million, the group said.
"The August surge resulted from the unique combination of a sustained decline in interest rates, pent-up demand from inventory shortages earlier in the year, and the pressure to close the transaction before the start of the school year," said the association's chief economist, David Lereah.
Wall Street expected existing home sales to decline to a rate of 5.10 million, according to a Dow Jones Newswires-CNBC poll of 14 economists.
As resales declined, the inventory of homes for sale loosened. The association said the supply of homes on the market stood at 4 months in September, compared with a revised level of 3.8 months in the previous month.
Despite September's sales decline, economists say conditions in the housing sector remain favorable. Mortgage rates on a conventional 30-year mortgage now stand at 7.83%, according to Freddie Mac, and the average rate on the 30-year mortgage has held below 8% since the week that ended Aug. 11. Rates have fallen since reaching a five-year high of 8.64% in mid-May.
"With mortgage rates trending downward, below 8% since mid-August, housing affordability should receive a boost near-term, keeping demand relatively buoyant in coming months," Neal Soss, chief economist at Credit Suisse First Boston in New York, said in a report.
The National Association of Home Builders' index of housing activity also is promising. The trade group's overall index rose 2 points, to 63, in October, while its gauge of expectations for sales in the next six months held steady at 72.
"Existing home sales have bottomed, thanks to the combination of lower mortgage rates and still-solid income gains," said economists at UBS Warburg before the release of the figures. "Indeed, buyer affordability turned up in August and continues to climb."
"Current housing market activity is really nothing short of remarkable," Mr. Lereah said. "Consumer demand remains remarkably resilient right now and we're not seeing a slowing in housing activity. The monkey wrench right now is the volatile stock market."
"Everything that comes on the market seems to be sold, and seems to be sold fairly quickly, which is consistent with a strong economy," said Mark Vitner, senior economist at First Union Corp. in Charlotte, N.C.
The Realtors association said home resales fell 8.8% in the Northeast, 3.5% in the Midwest, and 3.5% in the South but rose 2.1% in the West.
Home prices decreased in September. The median price was $141,800, against $143,200 in August.