U.S. Existing-Home Sales Enter 14th Straight Month Of Declines
Decline suggests continued weakness in housing market despite strong economy. U.S. Existing-Home Sales Enter 14th Straight Month Of Declines (#GotBitcoin?)
The U.S. housing market continued to soften in April, with the spring selling season so far proving a disappointment despite falling mortgage rates and a strong economy.
Existing-home sales fell 0.4% in April from the previous month to a seasonally adjusted annual rate of 5.19 million, the National Association of Realtors said Tuesday. Compared with a year earlier, sales in April declined 4.4%, the 14th straight month of annual declines.
The housing market is “underperforming in relation to economic performance, with job creation and [lower] mortgage rates,” said Lawrence Yun, the trade group’s chief economist.
The housing market has struggled for more than a year as rising prices, higher mortgage rates and a shortage of inventory have led would-be home buyers to tap on the brakes.
Those factors seemed to be shifting in favor of buyers this spring, raising hopes for a sales rebound. Average mortgage rates have fallen nearly a percentage point since November, the number of homes for sale has grown and home-price growth has moderated.
So far, that hasn’t been enough to buoy sales. “The big headwinds that are keeping things down are still there,” said Cheryl Young, a senior economist at Trulia.
The report for April continued to show that the market is shifting in favor of buyers. The median sale price for an existing home in April was $267,300, up 3.6% from a year earlier. Home price appreciation has slowed significantly from a year ago, when price growth was running over 5%.
There was a 4.2-month supply of homes on the market at the end of April, based on the current sales pace, up from 4 months last April and the highest level this year, according to the Realtors.
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“Buyers have more time to make decisions on properties now. Last spring things were going really quick,” said Ashley Lauren Farnschlader, a real-estate agent in Philadelphia.
But the signs of a slowdown could be scaring off some buyers fearful of acquiring a house they may have difficulty selling in the event of another market downtown, reminiscent of the crash a decade ago.
“There are real risks there for the younger generation to get a little bit gun-shy at the first sign of things moderating,” said Ralph McLaughlin, deputy chief economist at CoreLogic Inc.
Nonetheless, economists cautioned against reading too much into the lackluster data for April. Pending home sales, which typically predict closed sales the following month, were up nearly 4% in March to an eight-month high. Economists said that closings may have been delayed by a backlog in mortgage applications.
“It’s possible for a month or so the process just got clogged, that lenders just weren’t expecting a surge of mortgage applications,” said David Berson, chief economist at Nationwide Insurance.
Purchases of previously owned homes account for most of U.S. homebuying, although the new-home market recently has been showing some signs of a rebound. Home-building in the U.S. increased 5.7% in April from the prior month, driven by an uptick in single-family construction across much of the country. A gauge of home-builder confidence, meanwhile, rose to the highest level since last fall.
“Our forecast is that any lull we’re seeing in the market now is temporary,” Mr. McLaughlin said.
U.S. Existing-Home Sales Declined 2.2% in September
Sales fell to a seasonally adjusted annual rate of 5.38 million.
Sales of previously owned U.S. homes declined in September, a sign that high prices and slim inventory continue to weigh on the housing sector despite low interest rates, strong employment and firmer wage growth.
Existing-home sales fell 2.2% in September from the previous month to a seasonally adjusted annual rate of 5.38 million, the National Association of Realtors said Tuesday. Economists surveyed by The Wall Street Journal expected sales declined 0.7% last month.
“The housing market is in an unbalanced situation” with soaring prices and persistent low inventory, said Lawrence Yun, the trade group’s chief economist.
Compared with a year earlier, sales in September rose 3.9%. Purchases of previously owned homes account for the bulk of U.S. home-buying. August’s sales were revised up slightly to a 5.50 million pace from an earlier estimate of a 5.49 annual pace.
The housing market’s weakness has come despite many favorable conditions for potential buyers. Mortgage rates have been dropping steadily in recent months. The average interest rate on a 30-year fixed-rate mortgage at the end of September was 3.64%, down from about 4% six months earlier, according to Freddie Mac.
Still, a shortage of homes for sale in some areas means home prices remain high. The median sale price for an existing home in September was $272,100, up 5.9% from a year earlier. That marked 91 straight months of year-over-year price gains and the strongest pace of appreciation since January 2018. There was a 4.1 month-supply of homes on the market at the end of September, based on the current sales pace.
U.S. Existing Home Sales Fell 1.7% in November
Tight supply of homes, especially on the cheaper end of the market, continues to be a limiting factor.
U.S. home sales are picking up in the second half of the year, a sign that low mortgage rates and a solid economy are helping to heat up the once-sluggish housing market going into next year.
Existing-home sales were up 2.7% in November from a year earlier, the fifth straight month of year-over-year gains, the National Association of Realtors said Thursday.
While home sales were down 1.7% compared with October at a seasonally adjusted annual rate of 5.35 million, economists said there are fresh signs that buyers are becoming more confident after a lethargic first half of the year. Sales sputtered through most of the spring selling season, when activity is normally high, falling annually every month until the summer.
Now, historically low mortgage interest rates and an increase in millennials looking to buy their first home are luring more buyers into the market. Millennials account for nearly half of home-purchase mortgage originations, according to data from Realtor.com. ( News Corp, parent of The Wall Street Journal, operates Realtor.com under license from the National Association of Realtors.)
The U.S. unemployment rate fell back to 3.5% in November, a 50-year low, and wage growth also has picked up modestly. The National Association of Home Builders added to the upbeat mood on Monday when it reported its housing market index, which measures industry confidence, rose in December to its highest level since June 1999.
Joseph LaVorgna, Natixis chief economist for the Americas, wrote in a note to clients Tuesday that the improvement in home-builder sentiment is a positive sign for the broader economy heading into 2020.
“Residential construction activity should be a meaningful, positive, contributor to real [gross domestic product] growth next year,” he wrote.
Still, others noted significant headwinds remain. The number of homes available remains low, economists say. That is especially true at the cheaper end of the housing market, as median home prices continue to rise in most parts of the country.
At the current sales pace, there was a 3.7-month supply of homes on the market at the end of November, below 4.0 months at the same time last year. Limited housing stock has contributed to higher home prices this year, with the median sales price for an existing home in November up 5.4% on year at $271,300.
“If we were building more homes under $300,000, these [sales] numbers would be through the roof right now,” said Robert Frick, an economist at Navy Federal Credit Union.
The number of homes sold in that price range continued to shrink, according to NAR’s data. Sales of homes priced at $250,000 and below declined in November from a year ago, while sales of those in the $500,000-to-$750,000 range posted the strongest gains, rising 8.0%.
“The new-home construction seems to be coming to the market, but we are still not seeing the amount of construction needed to solve the housing shortage,” Lawrence Yun, NAR’s chief economist, said in a news release.
Meanwhile, the average interest rate on a 30-year ﬁxed mortgage was 3.73% as of Dec. 12, according to Freddie Mac, up slightly from September’s lows but below year-earlier levels.
Low interest rates were one of the reasons that David Grant decided to buy a home this fall after a monthslong search in San Diego. Mr. Grant, a retail manager and writer, wanted to swap his rising rent with a mortgage payment on for a home priced around $500,000. But he was continually thwarted by higher bids.
“We were going almost every day to look at houses,” Mr. Grant said, recalling one tour that included squatters living in tents inside the home. “You make an offer, you get to the inspection, and there’s an issue”
He and his fiancée eventually settled on a three-bedroom home with a basement apartment they could rent to Mr. Grant’s brother. To make the mortgage, they obtained an FHA loan, requiring just 3.5% down.
Jodie Lee, a Redfin real-estate agent in San Diego, said more clients are looking for homes with adjacent apartments to rent out and help offset housing costs.
But the supply coming to market is dwindling, she said, as many homeowners are reluctant to sell on concerns they wouldn’t be able come by a new, suitable home.
“They can’t find something that checks all their boxes,” she said.
Some see a reason for optimism in new-home construction, however, which could provide opportunities for first-time buyers as well those looking to “move-up,” making more existing homes available for sale. In November, single-family housing starts rose to a rate of 918,000 units, the highest such number since July 2007.
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