Existing home sales—which often dictate the strength of the market and the ability of distressed borrowers to recover—fell 1.2-percent to a seasonally adjusted rate of 1 of 4.97 million units in October—a drop from 5.03 million in September and a 20.7-percent decrease compared to the 6.27 million-unit statistic established in September of last year.

“As noted last month, temporary mortgage problems were peaking back in August when many of the sales closed in October were being negotiated,” said Lawrence Yun, NAR’s chief economist. “We continue to see the biggest impact in high-cost markets that rely on jumbo loans,” he added.
NAR’s latest market report also commented on the positive role FHA loans have started to play in the market.
“A trend away from subprime mortgages to FHA loans, which often carry much lower interest rates, is a positive development for consumers and the housing market going forward. Still, it will take some time for the change to yield a measurably higher closed sales volume in the aftermath of the subprime collapse. In the near term, we expect home sales to remain fairly stable,” said Yun.