Housing market takes nasty turn

Triangle sales fall; more homes sit unsold; more sellers lower prices

Economists looking for the bottom of the housing slump found instead an accelerating chasm in a new report on the Triangle market. Sales of existing homes fell 24 percent in September, the sharpest decline since the market turned down a year ago.

"That's big," said Moody's Economy.com economist Michael Helmar, who tracks Triangle housing. "Your market is on a downward track, and it looks like there may be some more pain to go."

The monthly report from Triangle Multiple Listing Service provided signs that there is indeed more misery ahead for the region's largest industry and the hundreds of businesses that depend on it. The inventory of unsold homes rose 23.7 percent from September 2006, and pending sales were down 14 percent, falling to their lowest level in four years.

Also, the number of homes on the market with reduced prices was 50 percent higher than a year ago, and the number of withdrawn listings was up 19 percent. The ranks of home sellers who had essentially given up and allowed their listings to expire was up 52 percent.

As the national housing market suffered through the worst conditions in at least 16 years, Triangle sales had been relatively healthy. Then the region's job growth began to slow in recent months.

Durham has added 3.4 percent more jobs in the past year, and Raleigh-Cary employment is up 2.4 percent. But most of those jobs were added before August, Helmar said.

"We're not bulletproof, we're just bullet resistant, and that means we're in a downturn," said Eb Moore, vice chairman and chief executive of Coldwell Banker Howard Perry and Walston, one of the Triangle's largest residential brokerages.

"We're outpacing the [national] market. The big question is: Have we bottomed out and started back up yet?"

Tighter lending rules for subprime borrowers, who are about 10 percent to 15 percent of Howard Perry's clientele, have cut into sales for months. And transplants, who make up 15 percent to 20 percent of the buyers, are having difficulty selling their homes in other markets.

Weak demand for mansions

More recently, Moore said, the market for homes costing $1 million or more has been particularly weak.

The number of pricey homes on the market has swelled as owners who financed them with adjustable-rate mortgages try to escape rising monthly payments, he said. Meanwhile, the pool of potential buyers has shrunk as interest rates for jumbo mortgages, higher than $417,000, have risen.

The glutted inventory of unsold homes includes 405 properties priced at $1 million, compared with 225 in March 2006. Moore said homes costing $1 million or more now take about a year to sell.

The report showed September closings at 1,990 for in Wake, Durham, Orange and Johnston counties, down from 2,630 a year earlier. The decline was nearly double the next largest monthly fall in the past year: 13 percent tumbles in December 2006 and July 2007.

Hot sellers below $350,000

Still, for the first nine months of 2007, total Triangle sales are down only 3 percent compared with the same period in 2006. And the price of an average closing continues to rise -- to $242,885 in September, up 5.7 percent from a year ago, according to the listing service.

The hottest sellers are homes at $350,000 or less, Moore said. "Anything under $350,000 is going as fast as you can get it on the market," Moore said.