Continuing the trend for this year, B of A’s traffic index fell sharply again in September, down 14.7 in September from 18.6 in August. It fell in 30 out of 40 markets with the greatest deterioration in Arizona, California, D.C., Florida and Nevada. The culprit was buyers delaying home purchases.

Foreclosures and low appraisals again drove price down which fell 17.1 in September, down from 21.2 in August. Even though foreclosures proportionally are relatively low, they added to the inventory glut. Some appraisals have forced buyers to lower prices.

B of A expects price declines to continue based on the excess inventory of homes for sale and the above mentioned factors. Single family existing home inventory reached 3.9 million in August.

Lastly on the mortgage side, fewer buyers qualify under new tighter lending standards. More contracts have been falling out as lenders continued to tighten standards with more money down or sometimes just closing doors.

Those are the three culprits, foreclosures, rising inventory and tightening lending practices.

Source, Bank of America