In Philadelphia region, existing-home sales down 21.1%

Existing-home sales in the eight-county Philadelphia region fell 21.1 percent year-over-year in the third quarter, while median prices eroded a scant 2.6 percent, data released yesterday show.

Nationally, however, sales were down just 7.7 percent, with almost 40 percent of third-quarter transactions foreclosures and short sales (in which the lender accepts less than what is owed) in the West and Florida, according to the National Association of Realtors. Deep price cuts involved in those sales depressed year-over-year median prices 9 percent.

The local existing-home data, from Prudential Fox & Roach HomExpert, using information from Trend Multiple Listing Service, were much better, however, than third-quarter new-home results.

Information collected from Hanley Wood Market Intelligence showed third-quarter new-home net sales down 41.5 percent in the region, with prices year-over-year down 12.6 percent.

Two bits of good news: The price drop is attributable primarily to a shift in sales to less-expensive townhouses, which now make up 49 percent of the region's new-home market, according to Wayne Norris, Hanley Wood's regional sales director.

The other is that the cancellation rate declined about 2 percentage points year-over-year - meaning that many buyers felt more comfortable with their purchases.

"Philadelphia is not dealing with the foreclosures and high investor rates that are seen in many other areas," he said. Inventory is lower than elsewhere, and "many builders have deals pending on mortgage commitments, so I expect that the Philadelphia region will experience a decent uptick in sales."

Builders nationally, however, are not as optimistic. The National Association of Homebuilders reported yesterday that its members' confidence, based on a survey of expectations, dropped in November to the lowest level since record-keeping began in 1985 - a sign that the deepening credit crisis is reducing new-home sales.

Norris acknowledged that the same things affecting the nation as a whole are hurting this region, as well, noting that the challenge of getting a mortgage, substantial reduction in stock market wealth, and the economy in general, as well as rising unemployment numbers, are forcing new-home buyers to sit tight.

Steve Storti, senior vice president of Prudential Fox & Roach, said Norris' new-home assessment applied to existing homes as well.

"The overall economic condition is taking a toll," Storti said. "There is pent-up demand and great values. All we need is a trigger."

The data do not include October, which brought the worst economic news so far. Industry officials expect pending sales for that month, to be released Dec. 8, to reflect it.

Art Herling, regional vice president of Long & Foster Real Estate Inc., is one of those predicting a sharp downturn in October pending data, which reflect agreements of sales signed during the month that will close 60 to 90 days later.

"Sales are coming back so far in November," said Herling, who said he believed that purchases were interest-rate driven. He points to a recent decline in 30-year, fixed-rate mortgages to 6.14 percent from 6.55 percent as a good sign.

In a separate third-quarter study of trends in the city of Philadelphia, Wharton research fellow and Econsult vice president Kevin Gillen said the typical single-family home (excluding condos) fell in value an average of only 0.3 percent from the same period a year ago.

When added to previous declines, city prices are cumulatively down 6.8 percent from the housing market's peak at the end of 2007's second quarter, Gillen said.

Although the Philadelphia market has declined less than in many other U.S. cities, the news here is still sobering, Gillen said.

"The continued high number of homes for sale combined with a continuously shrinking pool of buyers means homes continue to linger on the market," Gillen said.

"The average time it took to sell a home in Philadelphia in the third quarter," he said, "was 67 days - well above the 30 to 40 days it takes in a balanced market."

Third-quarter year-over-year comparisons. Prices in thousands.

2007           2008        Pct.          2007          2008         Pct.

County            sales          sales          Chg.            prices          prices       Chg.

Bucks               2,025          1,627       -19.7         $319.0       $295.0       -7.5

Burlington          1,487          1,170       -21.3         $249.9       $226.3       -9.5

Camden

1,686          1,294       -23.3         $202.5       $194.0       -4.2

Chester

1,673          1,482       -11.4         $320.0       $310.0          -3.1

Delaware

2,060          1,143       -30.0         $225.0        $225.0           0.0

Gloucester           858           678        -21.0         $221.7       $215.0          -3.0

Montco

2,950        2,288       -22.4         $280.0       $265.0          -5.4

Phila.

4,432          3,569        -19.5         $149.0       $150.0        +0.7

8-county

17,171         13,551       -21.1         $235.0       $229.0          -2.6

SOURCE: Prudential Fox & Roach HomExpert