Home resales rise more than forecast in September

Home resales in the U.S. rose more than forecast in September, aided by foreclosure-driven declines in prices that indicated the market was stabilizing before the latest slump in financial markets.

Purchases of existing homes jumped 5.5 percent last month to a 5.18 million annual pace, the highest level in a year, the National Association of Realtors said Friday in Washington. The median price dropped 9 percent

In the Chicago area, sales of single-family homes and condominiums dropped 6.2 per cent in September compared to a year earlier; a total of 6,371 were reported, according to the Illinois Association of Realtors.

During the same period, the median home sales price in the nine-county area droppped 13 per cent to $224,000.

Economists said sales figures for this month and next will be critical in determining whether sales have reached a bottom as predicted by the Realtors' group.

Federal Reserve Chairman Ben S. Bernanke earlier this month said even households with "good credit" were finding it tough to get mortgages.

"This may be a temporary bump as we clear out these foreclosed properties," said Adam York, an economist at Wachovia Corp. in Charlotte, North Carolina. "As the meltdown really hits these figures in late October and November, that's when we could see some retracement."

Resales were forecast to rise to a 4.95 million annual rate from a 4.91 million pace in August, according to the median estimate of 66 economists in a Bloomberg News survey. Projections ranged from 4.7 million to 5.11 million.

Sales rose 1.4 percent compared with a year earlier, the first year-over-year increase since November 2005. Resales totaled 5.65 million in 2007.

Friday's figures compare with the 4.86 million level reached in June, the lowest in a decade and 33 percent down from the record reached in September 2005.

Foreclosure-related sales accounted for 35 percent to 40 percent of last month's total, the agents' group said. Of those, about 80 percent were for primary residence, higher than the average of about 75 percent and signaling that investors are not a primary reason for the jump, said Lawrence Yun, the group's chief economist.

"In terms of sales, I think we have bottomed out," Yun said. "The first step to housing-market stabilization is rising home sales. Hopefully, this trend can continue."

Daily Herald staff writer Deborah Donovan contributed to this report.