September was a month full of chaos in the mortgage and housing markets. Looming failure of Wall Street titans like Lehman Brothers and AIG, buyouts of troubled banks like Washington Mutual and Wachovia, and talks of federal government intervention made interest rates unpredictable for potential homebuyers. With ARM loan interest rates continuing to adjust upward, and energy and food costs remaining high, borrowers by the hundreds of thousands forced to enter foreclosure. In fact, according to the Mortgage Bankers Association, 40 percent of all subprime ARM loans in the U.S. were in some stage of foreclosure or default in September, with 12 percent of all prime ARM loans falling into the same category...
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Home Sales Pace

U.S. existing home sales in August declined 2.2 percent to a seasonally adjusted annual sales pace of 4.91 million units from 5.02 million in July, according to the National Association of Realtors (NAR).The current figures are also down on a year-over-year comparison, falling 10.7 percent from the 5.5 million unit pace of August 2007...
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Sales Pace by Region

Regionally, here in the Northeast, we experienced a 6.6 percent decrease in sales from July to August and a 15.0 percent drop from August 2007.

The West saw sales fall 5.3 percent in the last month, but was the only region to see a year-over-year rise, as dramatically lowered prices helped work off some of the excess inventory. Home sales there increased 4.9 percent since August 2007.
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Home Prices

As of August 2008, the national median home price had fallen 9.5 percent in the preceding 12 months, to $203,100 due to rising foreclosures, increasing inventory, and decreased availability of consumer credit. The median price represents the price that is the midpoint - half of all home sales prices were above the median and half were below. The median generally provides a clearer picture of home prices than the average or mean would.
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Inventory

One bright spot in the month's report is that housing inventory is shrinking. In August 2008, there were roughly 4,255,000 existing homes on the market, a 7.0 percent decrease from the previous month and a 2.9 percent decrease during the 12 preceding months.
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Mortgage Rate News & Analysis

U.S. mortgage interest rates plunged downward early through most of September 2008, according to data from Freddie Mac, but they experienced a similarly large upward tick during the last week of the month. From the first week to the second, the average interest rate on a 30-year fixed-rate mortgage dropped a sizable 0.42 basis points to 5.93 percent, excluding points, to 6.35 percent. From there the rate continued free falling to 5.78 percent, the lowest rate in almost nine months. Yet during the week ended Sept. 25, the average rate leaped back up 0.31 basis points to 6.09 percent.
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