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South leads regions in existing home sales drops

November 24, 2010 - The country as a whole saw home sales activity drop last month as many relocating families had their plans put on hold during foreclosure halts, though the South was hit particularly hard.

The National Association of Realtors reported that existing home sales in that region fell 3.4 percent to an annual pace of 1.71 million in October. Sales are also 21.4 percent below their year-ago levels. Nationally, sales dropped 2.2 percent from the previous month and 25.9 from a year earlier, when sales were surging thanks to the federal homebuyer tax credit.

Analysts say that buyers are being held back not just by foreclosure moratoriums - which are delaying many people's moving plans - but also by tight credit that has made it difficult for some to qualify for a mortgage. Additionally, inaccurate appraisals are holding back many home sales.

"A return to common sense loan underwriting standards would go a long way toward achieving responsible, sustainable homeownership," said NAR president Ron Phipps. "There remains an elevated level of appraisals that fail to provide accurate valuation, which is causing a steady level of sales to be cancelled or postponed."

Members of the real estate industry have taken many steps recently to try to improve the accuracy of appraisals. This summer, Fannie Mae issued rules banning lenders unilaterally cutting the valuation of a home without seeking approval from the appraiser first.
 

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