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Sales of U.S. existing homes drop 1.9 percent in September

Published Oct. 22, 2013

WASHINGTON — Americans bought fewer existing homes in September than in August, held back by higher mortgage rates and rising prices.

The National Association of Realtors said Monday that sales of resold homes fell 1.9 percent last month to a seasonally adjusted annual rate of 5.29 million.

Mortgage rates rose sharply over the summer from their historic lows, threatening to slow a housing recovery that began last year and has helped drive modest economic growth. But many economists expect that home sales will remain healthy, especially now that rates have stabilized and remain near historically low levels. The average rate on a 30-year fixed mortgage was 4.28 percent last week, down from a two-year high of 4.58 percent in August. That's also far below the 30-year average of 7 percent, according to Bankrate.com.

Sales of existing homes have risen a healthy 10.7 percent in the past 12 months. Still, that's the slowest year-over-year increase in five months.

And the median home price has risen 11.7 percent in the past year, the Realtors said. That's also the slowest annual gain in the past five months.

Many first-time buyers have been unable to enter the market. They made up just 28 percent of purchasers in September, down from 32 percent a year ago. In healthier housing markets, they typically make up at least 40 percent of buyers.

First-time buyers are having trouble qualifying for loans because many banks have adopted tougher lending restrictions and higher down payment requirements since the housing bubble burst.