Prices fall as home sales rise

Financial crisis deepens as sales rose and inventories plunged as builders cut prices to its lowest level in four years to move property.

The annual sales pace of 464,000 homes was up 2.7 percent from the revised August figure of 452,000, originally reported as 460,000 homes, Commerce Department data showed on Monday. Economists surveyed by Reuters expected the new homes sales pace to dip to 450,000 from that original figure.

The median sales price of $218,400 was 9.1 percent lower than the year-ago point and the lowest since the $211,600 level reached in September 2004, when the housing market was on the upswing.

Five-year run-up in home values stopped in 2006 and has turned into a housing explosion of rising foreclosures and sinking home prices. September sales were off 33.1 percent from their deflated levels of a year ago.

Finding ways to attract buyers

For the last two yearsrs, home builders have tried to find the highest price level that will  attract buyers and help them burn off an overstock of homes.

The lower prices of September seem to have attracted some buyers since the housing inventory of 394,000 was the lowest since the 383,000 homes for sale in June 2004.

Markets were moved higher after the news but had flattened by the late afternoon.

The 7.3 percent decline in inventory from August was the sharpest on record. At the current sales pace, it would take 10.4 months to clear the overstock of homes compared to the 11.4 months reported in August.