Sales of existing homes declined again in September according to information released Wednesday by the National Association of Realtors® (NAR) but the third quarter overall was better than analysts had predicted.

Total existing home sales which include single family houses, town houses, and condos were down 8 percent to a seasonally adjusted annual rate of 5.04 million units from an August figure of 5.48 million units, a figure which was also lower than had originally been reported. The September figures are 19.1 percent lower than the 6.23 million unit level of sales in September 2006.

However, the third quarter finished at a 5.42 million unit sales pace when NAR analysts had expected only 5.38 million.

The NAR report blamed the sales decline on temporary problems in the mortgage market which disrupted sales and distorted prices on sales closed during the month. Lawrence Yun, NAR's senior economist, said the numbers are understandable. "Mortgage problems were peaking back in August when many of the September closings were being negotiated, and that slowed sales notably in higher priced areas that rely more on jumbo loans," he said. "The good news is that mortgage availability has markedly improved in recent weeks with interest rates on jumbo loans falling, and more people are applying for safer and conforming FHA mortgage products. Some of the cancelled transactions will move forward as buyers apply for other loans."

The median price for all housing types was $211,700 in September, down 4.2 percent from the median price one year earlier, $220,900.

The report speculated that the decline in median price was attributable to a distortion in the sales pattern. Because there have been problems with obtaining jumbo loans, proportionately more low priced homes were sold. Where buyers are not so dependent on jumbos, as in the Midwest, median prices actually increased.

The backlog of available housing crept up 0.4 percent in September. There are now 4.4 million existing homes for sale. At the present sales rate this represents a 10.5 month supply as compared to a 9.6 month supply in August. "It appears raw inventories are stabilizing, but the housing supply is a bit inflated now because the sales pace does not reflect underlying market conditions - sales were dampened by the mortgage cancellations," Yun explained. "Once the pent-up demand begins to move, we'll see housing supplies begin to ease and then prices will edge up."

Single-family home sales dropped 8.6 percent to a seasonally adjusted annual rate of 4.38 million in September from 4.79 million in August, and are 19.8 percent below 5.46 million-unit pace in September 2006. The median single-family home price was $210,200 in September, down 4.9 percent from a year ago.

Existing condominium and co-op sales were off 4.3 percent to a seasonally adjusted annual rate of 660,000 units from 690,000 in August, and are 14.7 percent below the 774,000-unit level in September 2006. The median existing condo price was $221,700 up 1.4 percent from a year ago.

Sales in the South declined 6.0 percent in September to an annual pace of 2.05 million, and are 18.7 percent below 2006 figures. The median price was $174,400, down 5.5 percent from last September.

In the Midwest, existing-home sales were down 7.0 percent to an annual rate of 1.19 million in September, and are 16.2 percent below September 2006. The median price rose 1.4 percent from one year ago to $170,700.

Existing-home sales in the West fell 9.9 percent in September to a level of 910,000, and are 27.8 percent below a year ago. The median price in the West was $308,900, which is 8.8 percent lower than September 2006.

Sales in the Northeast fared the worst, dropping 10.0 percent since August to a pace of 900,000, which is 13.5 percent lower than September 2006. The median price in the Northeast was $261,700, up 0.5 percent from a year ago.