WASHINGTON (AP) – US housing sales fell during the sixth straight month of September, a sign that housing has increasingly…
WASHINGTON (AP) – US housing sales fell during the sixth straight month of September, a sign that housing has increasingly become a weak place for the economy.
The National Association of Realtors said Friday that sales fell by 3.4 percent month, the biggest decline of 2½ years, to a seasonally adjusted annual rate of 5.15 million. It’s the lowest sales rate since November 2015.
Hurricane Florence hit sales in North Carolina, but even the effects of the storm excluded, sales would have fallen more than 2 percent, NAR said. After reaching the highest level of decades last year, sales of existing housing have declined steadily in 2018, among rapid price increases, higher mortgages and a tight supply of available houses.
However, the analyzes are still optimistic for the broader economy. The most forecasted growth will be no more than 3 percent in the yearly rate in July-September quarter after a robust expansion of 4.2 percent in the second quarter.
“Housing is no longer a tailwind for the economy, but the main winds blow very carefully,” said Michelle Meyer, economist at Bank of America Merrill Lynch, before the report was released.
The homes are likely to deteriorate further in the coming months. September weakness came before the mortgage jumped further this month to its highest levels in seven years. Sales fell by 4.1
percent in September a year ago.
“Without a doubt, there is a clear shift in the market,” said Lawrence Yun, chief economist at the National Association of Realtors.
One sign of the transition is that demand for existing housing slows down. Rental rates rise slower and the availability of vacant houses, while it is low, increases. The buyer’s traffic has also decreased, Yun said.
And with rents that are also stabilizing in many cities, many buyers may not feel as much to buy a new home.
“Hiring can be seen as a better finding as rising mortgage rates, steadily rising housing prices and sluggish wage increases dampen the affordable advantage of a typical mortgage loan,” says Aaron Terrazas, senior economist at Zillow Real Estate.
Sales have fallen most in the West, where most of the country’s hottest real estate markets are located and where prices have risen for several years. Sales disturbed 12.2 percent in that region over the past year, compared with only 5.6 percent in the northeast and 1.5 percent in the Midwest. They fell only 0.5 percent to the south from a year earlier, despite a sharp decline in September due to Hurricane Florence.
The highest prices also report slower sales, a shift from earlier this year when sales outlets were concentrated in the middle of priced and cheaper housing. Housing priced at $ 1 million and higher saw sales fall 2 percent from one year ago.
Higher borrowing costs make housing cheaper. The average interest rate on a 30-year real estate loan fell a week but was close to a seven-year high of 4.85 percent. A year ago it stood at 3.88 percent.
There are also signs that households are increasingly willing to sell as mortgage rates rise. This is because many people have prices below 4 percent, so selling a home and buying a new would require them to accept a higher tax rate.
The Realtors surveyed consumers and found that 16 percent do not want to give up their mortgage and buy a new house. This is a typical level of 10 percent.
This story has been corrected to show that sales for the year dropped 0.5 percent to the south, instead of 5.4 percent.