Applications for mortgages–both for new homes and refinancing–at big U.S. banks dipped 3.9% last week compared with the previous week. The applications were down 1.6% year-over-year.

ARMS made up only 24.5% of last week’s applications, their smallest percentage in three years. The average interest rate for ARMs slipped from 5.88% to 5.87%.

Applications for loans to buy a home rose 1.3% over the last week, but are down roughly 14.6% from last year. Applications for loans to refinance existing loans sank 9.6% in the past week, but are up about 18% from the previous year.

Technorati Tags: real estate, real estate market, mortgages, home loans, ARMs, refinance, refinancing

The biggest drop in existing home prices ever recorded was posted in October, at the end of a three-month slump. The National Association of Realtors said Tuesday that it expects weakness in pricing to drag on into next year.

The previous record drop was a 2.1 percent decline in November 1990, the real estate group said.

Condo prices have fallen even more steeply and steadily. They fell 5.3 percent in October, the fifth straight year-over-year decline. The median condo price is now down 7.5 percent from the high reached in June 2005.

The weakness in home prices probably won’t disappear soon, according to Realtors spokesman Walter Molony. “We do expect we’ll see prices stay below year-ago levels through the end of this year, and pick up in the first quarter of 2007,” he said.

The drop in prices illustrates a sharp change in the market. Median home prices peaked at a record high $230,000 just last July. Last year, existing home sale prices were 16.8 percent above October 2004 levels–the fourth-largest year-over-year increase in prices the NAR had ever recorded.

“Certainly the astronomical price appreciation seen over the last few years is a thing of the past,” said Wachovia economist Phillip Neuhart. “Much of the decline in median prices over the last few months can be attributed to the changing mix of homes sold as cautious buyers, seeing a weakening housing market, are less likely to buy up into a more expensive home.”

The huge increases in home prices a year ago caused a new-construction monsoon, flooding the market with new homes and leading in part to the current downturn, despite historically low mortgage rates and low unemployment, two conditions that normally build further price appreciation.

Not only did developers build homes in record numbers last year, but many were bought by speculators looking for quick profits, rather than places to live. Those buyers are now looking to sell the homes.

The existing home sales report comes the day before the government reading on new home sales, which showed a 9.7 percent year-over-year drop in median new home prices in the September report.

Many major builders, including Pulte Home, Centex, D.R. Horton, Lennar, KB Home and Toll Brothers have seen sales and earnings plummet as a result of the housing slowdown, and are warning that the housing market hasn’t bottomed out . . . yet.

Still, last year’s strong price gains have left most buyers who stayed in their homes for a year or more with more valuable homes, even allowing for recent declines in prices.

Technorati Tags: Chicago Real Estate market, Chicago Condos, Chicago Home prices

@ 7:30 p.m. at the East Bank Club, 500 N. Kingsbury, for 17 condominiums located at Huron Street Lofts in River North.  Open houses will be held on November 29th from 5-7 p.m., and December 3rd from Noon-2 p.m.  They’re 1 & 2 bedroom condo lofts that feature timber construction and original exposed brick walls.  There’s also a building sundeck. These loft condos were previously priced at $389,000, but are going to go on absolute auction, which means that there is no reserve price - these could go really cheap, but the suggested opening bid is $125,000.  Rick Levin & Associates, Inc. will be leading the auction.

Technorati Tags: Chicago condos, Chicago loft condos, Chicago real estate auction