WASHINGTON -- Sales of existing homes fell 1.7% in September after a big increase the previous month, but the trends in the housing market remain positive, the National Assn. of Realtors said Friday.
The drop from August, which was in line with analysts' expectations, was caused by a tighter supply that is helping push up prices and encourage more construction, the group said.
Sales decreased to a seasonally adjusted annual rate of 4.75 million in September, down from a revised pace of 4.83 million in August. But the rate of sales last month was up 11% from a year earlier.
And the median sales price last month was up 11.3% from last September, marking the seventh-straight month of year-over-year increase, the Realtors group said. The last time there were that many consecutive months of year-over-year price increases was in late 2005 to early 2006, during the housing boom.
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"Despite occasional month-to-month setbacks, we're experiencing a genuine recovery," said Lawrence Yun, chief economist for the group. "More people are attempting to buy homes than are able to qualify for mortgages, and recent price increases are not deterring buyer interest. Rather, inventory shortages are limiting sales, notably in parts of the West."
Tighter inventory, continued low mortgage rates, and rising prices all indicate a housing market rebound.
This week, the government reported that new home construction starts were up in August to their highest annual rate in four years.
And in California, one of the states hardest hit by the collapse of the housing market, the number of homeowners entering foreclosure fell in the three months ending in September to the lowest quarterly level since early 2007, according to a real estate firm DataQuick.
Reduced foreclosures also translate into a smaller inventory, which helps raise prices.
Distressed sales -- either foreclosures or short sales -- were up in September from the previous month, accounting for 24% of sales compared with 22% in August. However, a year earlier in September 2011 such transactions accounted for 30% of all sales.
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The were 2.32 million existing homes for sale in September, down 3.3% from August.
"The shrinkage in housing supply is supporting ongoing price growth, a pattern that could accelerate unless home builders robustly ramp up production," Yun said.
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