November 13, 2008 / 9:17 PM / 10 years ago

U.S. Oct home sales plunge 19 pct -survey

NEW YORK, Nov 13 (Reuters) - U.S. home sales sank 19 percent in October from September as fears about the economy kept buyers on the sidelines and sellers were reluctant to drop prices, according to a survey of real estate agents released on Thursday.

The biggest declines were in sales of homes not in distressed situations, the survey found. Distressed properties are those in foreclosure or short sales, in which the lender agrees to accept a sale price that does not cover the full balance of the mortgage.

Michigan, whose economy has been roiled by the troubled auto industry, posted the biggest decline when excluding distressed properties, with sales down by 51 percent compared with September, according to the Campbell Communications survey of more than 2,500 agents.

Non-distressed sales in California fell 32 percent and those in Florida fell 22 percent in October from September.

New York and Michigan were among states with the largest drops in total sales last month, posting declines of 26 percent and 25 percent, respectively, the survey said. California’s total sales declined 13 percent, and Florida’s fell 8 percent.

Some smaller states had greater overall declines, but the number of responses fell short of those needed.

“To see a 51 percent drop in Michigan over a one month period is very significant,” Thomas Popik, the survey designer, said on a conference call. “There’s extreme uncertainty with regards with what’s going on in the automobile industry.”

Real estate agents in Michigan said expectations for thousands of job losses in a possible merger between General Motors Corp (GM.N) and Chrysler LLC have kept buyers on the sidelines.

In addition, the drop in financial markets accelerated in September and October, leading potential buyers to wait for market stability, the agents said.

“We just heard time and time again that people were holding back from the market because of their perception about the economic crisis,” Popik said.

Agents reported many sales were canceled as lenders denied financing for borrowers. They also said sellers are pricing homes too high compared with bank-owned properties.

Sales of bank-owned properties fell nationwide by 14 percent. In Florida, however, those sales increased by 8 percent.

Agents expected home prices would find a bottom during the first half of 2009. (Reporting by Al Yoon; Editing by Leslie Adler)

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