Don't forget to check the "Links" button for very useful files. Existing Home Sales Plunge by 8 PercentSales of Existing Homes Fall by Largest Amount on Record in SeptemberWASHINGTON (AP) -- Sales of existing homes plunged by a record amountin September as turmoil in mortgage markets added more problems to ahousing industry in its worst slump in 16 years. The National Association of Realtors reported Wednesday that sales ofexisting homes fell 8 percent in September the largest decline toshow up in records dating to 1999. The seasonally adjusted annualsales rate of 5.04 million existing homes was also the slowest pace onrecord. The weakness in sales translated into further pressure on prices. Themedian price -- the point at which half the homes sold for more andhalf for less -- fell to $211,700 in September down by 4.2 percentfrom the sales price a year ago. It marked the 13th time out of thepast 14 months that the year-over-year sales price has decreased. The 8 percent decline in sales was bigger than the 4.5 percent declinethat had been expected. Analysts blamed the bigger-than-expected slump on the turmoil that hitcredit markets and mortgage markets in August as worries increasedover rising mortgage foreclosures. Those worries resulted in a drying up of the availability of so-calledjumbo mortgages loans over $417,000 which are particularly importantin high-cost areas such as California."Mortgage problems were peaking back in August when many of theSeptember closings were being negotiated and that slowed sales notablyin higher priced areas that rely more on jumbo loans," said LawrenceYun senior economist for the Realtors. By region of the country sales were down 10 percent in the Northeast,9.9 percent in the West. 7 percent in the Midwest and 6 percent in theSouth. The slowdown in sales meant that the inventory of unsold homes rose to4.4 million units in September. At the September sales pace it would10.5 months to eliminate the overhang of unsold homes a record lengthof time. Economists are worried that the huge levels of unsold existing and newhomes will put further downward pressure on prices. Yun said that the price declines should be put into perspective inthat they are occurring after a five-year housing boom which pushedprices up to record levels. He forecast that prices will decline by about 1.5 percent this year. That would be the first annual price decline on Realtors' recordsgoing back four decades. The troubles in housing have been a drag on overall economic growth,increasing worries that the housing slump and related credit markettroubles could become so severe that they will push the country into arecession. However many private economists believe that the Federal Reserve,which cut a key interest rate for the first time in four years lastmonth will continue cutting rates in a campaign to make sure that theweakening economy does not tumble into a full-blown recession. Analysts said the price declines will worsen in coming months untilinventories are reduced to more sustainable levels. Ian Shepherdson,chief U. S economist at High Frequency Economics predicted that thehousing troubles will prompt the Fed to cut rates by a quarter-pointat its meeting next week."The housing crunch is accelerating. The Fed can't stand by andwatch," Shepherdson said.
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