Lenders such as Countrywide have announced programs to help troubled mortgage holders, which may improve the outlook for the remainder of the year, but September's housing sales illustrate how badly the credit markets froze during July and August.

In its latest monthly housing sales report, the National Association of Realtors says that home sales fell eight percent in September to a seasonally adjusted annual rate of 5.04 million units sold. That's down 19.1 percent in volume from September 2006, creating the largest inventory (10.5 months on-hand ) in 12 years. A balanced market is considered to be six months of housing inventory on hand, which means it would take six months to sell that inventory to zero homes left for sale.

Mortgage interest rates were more favorable in September, down to 6.38 percent from 6.57 percent in August, for a 30-year conventional fixed-rate loan, but that didn't help buyers get commitments from lenders in August when home sales contracts were being negotiated, says Lawrence Yun, NAR senior economist.

"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,” says Yun. “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.”

Still, the third quarter finished better than expected, with a 5.42 million annual rate of existing-home sales versus the 5.38 million forecast by NAR.

Always in real estate the news is good for someone, and that someone is any buyer. Bets are on that the Fed will lower short-term interest rates by about a point as its Halloween treat. Mortgage interest rates are tied to mortgage-backed securities, long-term rates that may fall significantly by the end of the year.

Interestingly, condominium and coop sales fell more slowly (4.3 percent) than detached single-family home sales (8.6 percent). The median condo was up 1.4 percent in price ($221,700) from a year ago, while the median single-family home dropped 4.9 percent to $210,200.

That could mean that absorption is starting to pick up in the non-owner occupied investment and second home category.

The news was worse in California, which is helping to weigh down the national numbres. Approximately one out of ten U.S. homeowners lives in California, so sales of homes decreasing 38.9 percent in September year-over-year is significant. The California Association of Realtors also reported that home prices declined (4.7 percent) at the largest month-to-month rate on record.

Explained C.A.R. President Colleen Badagliacco, "California’s sales fell more steeply than those of the U.S. as a whole because of its heavy reliance on jumbo loans -- those above the conforming loan limit of $417,000,” she said.

Published: October 25, 2007

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.