Falling mortgage rates and the government's homebuyer tax credit continued to fuel home sales in September. The seasonally-adjusted annual sales rate of total existing homes jumped 9.4% from August levels to 5,570,000 units. This is the highest annualized sales of existing homes has been since July 2007. Existing home sales are up 9.2% from September of last year. However, median existing home prices continued to trend lower in September. The median sales price of an existing home declined to $174,900 from $177,300 in August. The median existing home price is 8.53% lower than the same time last year when the median price was $191,200. Median existing home prices have now declined for three straight months and are back to their lowest levels since May.
Existing home inventory levels posted its second consecutive month of declines in September. Inventory of existing homes fell 7.49 percent to a preliminary 3,630,000 units from an upwardly revised 3,924,000 units in August. The rush to buy a home before the expiration of the homebuyer tax credit at the end of November has helped reduce the inventory of existing homes on the market.
National average mortgage rates increased from the previous week to 5.00% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on October 22nd. This is the second straight week that mortgage rates have increased and the highest they have been since last month. In the week ending October 16th, the MBA's seasonally-adjusted purchase index dropped 7.6% from the previous week and was down 3.87% compared to the same time last year. This is the second straight week that purchase applications have declined and the lowest the purchase index has been since the second week of August.