WASHINGTON — Sales of existing homes plunged nationwide by a record amount in September while median home prices dropped by the largest amount in nearly a year, reflecting deepening problems in the troubled housing market.
Analysts said the current downturn is already more severe than the housing slump of the 1990s and they predicted before it is resolved it will rival the 1980-82 housing slump when the industry was battered by double-digit mortgage rates and a steep economic downturn. The Puget Sound area has seen a more modest slowdown in housing sales than the rest of the nation.
The National Association of Realtors reported Wednesday that sales of existing homes fell 8 percent in September, the largest decline to show up in records dating to 1999. The seasonally adjusted annual sales rate of 5.04 million existing homes was also the slowest pace on record.
The median price — the point at which half the homes sold for more and half for less — fell to $211,700 in September, down by 4.2 percent from the sales price a year ago.
Problems in housing worsened in September following a severe credit crunch that hit in August as banks and other lenders tightened standards in the face of soaring mortgage defaults. The market all but dried up for subprime borrowers, those with weak credit histories, and people seeking so-called jumbo loans over $417,000.
Many economists said the problems in housing could well last for another year, given record-high levels of unsold new and existing homes.
“The housing market is unraveling,” said Mark Zandi, chief economist at Moody’s Economy.com. “We are in a steep downturn, and the prospects are that it is going to get worse before it gets better.”
The 8 percent decline in sales marked the seventh straight monthly decline and left sales activity 19.1 percent below the pace of a year ago. Last week, the government reported that construction of new homes slid to the slowest pace in 101/2 years in September as builders continue to cut back in the face of weak demand.
The housing slump followed five straight years of record sales, a boom that was fueled by the lowest mortgage rates in four decades.
That all began to turn down late last year as mortgage rates began to rise and buyers began to balk at the huge price gains that had been occurring in the hottest sales areas such as California, Florida and parts of the Northeast.
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