Existing home sales in the Northeast tumbled nearly 19 percent in August from last year, while the median sales price in the region fell 3.8 percent to $271,000, the National Association of Realtors said Wednesday.
Compared with the country as a whole, home sales were a bit weaker in the Northeast, but prices held up better. Nationally, sales -- without adjusting for seasonal factors -- were down 15 percent in August from a year ago, while the median price slid 9.5 percent to $203,100.
The Associated Press-Re/Max Monthly Housing Report, also released Wednesday, showed August sales dropped by more than 20 percent in seven of the nine Northeast metro areas tracked. The report analyzed home sales recorded by all real estate agents in those areas, regardless of company affiliation.
But barring a national economic meltdown, the Northeast is likely to emerge from its housing slump before other regions in the country, said Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies.
The reasons are twofold: The region didn't experience the ambitious overbuilding plaguing the Southwest, California and Florida and the Northeast also isn't suffering from a severe economic downturn like the Midwest.
"I can see the Northeast working through its excess of inventory and trolling around the bottom for a while," Retsinas said. "I can't even think about when that will begin to happen in those other areas of the country."
Retsinas pointed out, though, that job losses on Wall Street could eventually hurt home sales and prices surrounding New York city. In August, sales fell nearly 26 percent, the AP-Re/Max report showed, while the median price slipped less than 5 percent to $460,000. The numbers include Suffolk, Nassau and Westchester counties, but not New York city.
For the second month in a row, Pittsburgh recorded the worst sales decline at 32 percent from August 2007. But the city's median price posted the smallest drop in the region at less than a half-percent to $131,400. Even better for the market, the supply of unsold homes shrunk by a quarter last month.
"I think the economic conditions are leading some people, the traditional move-up buyer, feeling that maybe this is not the right time to put my house on the market," said Tony Mete, president of the Realtors Association of Metropolitan Pittsburgh.
He expects sales to continue to lag in September but more inventory to drop off. Mete hopes the possible $700 billion bailout of the U.S. financial system that Congress is debating this week would free up more mortgage money for buyers.
Only the most creditworthy buyers are qualifying for home loans as lenders have raised the bar for borrowers to qualify for a mortgage.
Those stricter credit standards have cut out about a quarter of potential homebuyers in Philadelphia, said Harry Caparo, chairman of Coldwell Banker Preferred in Philadelphia.
"The general condition of the mortgage market and uncertainty of the buyer are the issues today," he said.
Philadelphia also recorded a median price dip below 1 percent in August. Home values fell to $235,000 during the month, while sales activity declined 28 percent. The supply of homes on the market shot up by almost 22 percent.
Caparo expects September sales to be down another 20 to 25 percent after a "substantial drop" in pending sales in the last few months.
MaryAnn Sgobba, president of the Passaic County Board of Realtor, also laments that buyers don't think they can get a mortgage, so they're discouraged from even looking.
The number of sales fell almost 20 percent in the greater Passaic, N.J., area, including sales from the nine surrounding counties. But prices dipped just under 6 percent to $399,900 last month, a welcome adjustment compared to other cities, Sgobba said.
"We're not unhappy with August's stats," she said.
But the supply of unsold homes is ballooning in the Passaic area. Inventory jumped 26 percent in August from a year ago, which could put more downward pressure on prices if sales don't keep up.
More people are contacting Sgobba about current listings, a good sign she said, which could lead to more sales in September. She also hopes the housing rescue plan passed in May, which includes a credit of up to $7,500 for first-time homebuyers, will boost sales.
Foreclosures are the largest obstacle for Providence, R.I., where nearly one of five sales are distressed properties, said Ron Phipps of Phipps Realty in Warwick, R.I.The discounted properties are weighing on values too. The median price plunged by nearly 15 percent last month to $230,000, the largest drop in the Northeast, the AP-Re/Max report showed. Sales there also fell 22 percent in August.
"We've gone back to 2004 pricing which was pre-housing boom," Phipps said. "I'm looking very much to bottom in prices this fall or winter."
The median home price in Augusta, Maine, posted the second largest decline last month. Values there lost nearly 13 percent to $141,500 as the volume of sales slowed by almost 30 percent. Inventory was nearly unchanged.
"We're still in an adjustment period so we'll be down through 2008," said Bill Sprague, a partner at Sprague and Curtis Real Estate in Augusta. But he expects sales to perk up next year
J.W. ELPHINSTONE
The Associated Press September 24, 2008, 3:02PM ET
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