Existing-home sales up but prices keep falling

WASHINGTON — Sales of existing homes rose by the largest amount in more than five years in September. But analysts cautioned against reading too much into the gain, noting that it reflected conditions before the latest upheaval in financial markets increased the likelihood of a recession in the overall economy.

The National Association of Realtors reported that sales of existing homes rose by 5.5 percent from August to September to a seasonally adjusted annual rate of 5.18 million units — far better than the flat results analysts had expected. On an unadjusted basis, sales were up 7.8 percent from September last year.

But even with the gain in sales, prices kept falling. The median sales price has dropped to $191,600, down by 9 percent from a year ago.

In Richmond, Va., Jack Jebo sold his three-bedroom house last month for $267,000, after lowering his price $18,000. He carried two mortgages for two months.

"In retrospect, (the experience) probably wasn't too bad," said Jebo, 32, an attorney. "At the time, it probably felt pretty difficult because we didn't get an offer before we lowered the price."

Many analysts are predicting that home prices — already down 18 percent nationally from their peak in mid-2006 — could decline another 10 percent, as a continued glut of foreclosed homes being dumped on the market depresses prices further.

The National Association of Realtors estimated that 35 percent to 40 percent of sales currently are distressed sales — either foreclosed homes or short sales in which the owner is selling the house for less than the value of the mortgage.