Existing home sales fall sharply in US
The sale of previously-owned homes in the United States fell 3.2 percent to 5.12 million in October, according to the National Association of Realtors. This represents the biggest drop in four months, as rising mortgage costs keep would-be buyers out of the market.
The government shutdown was partially to blame for declining sales, as some closings may have been delayed due to the 16-day furlough. Mortgage rates, which have been rising since the spring, have been the biggest factor. The average rate for a 30-year mortgage fell to 4.19 percent in October, according to Freddie Mac. Fixed mortgage rates were 4.35 percent as of November 14, up from 3.34 percent a year earlier.
According to NAR chief economist Lawrence Yun, “The erosion in buying power is dampening home sales.” At the same time, “low inventory is holding back sales while at the same time pushing up home prices in most of the country.” The average price tag on a previously-owned home was $199,600 in October, up 12.8 percent from year-ago levels. October represented the 11th consecutive month of double-digit annualized growth rates.
Foreclosures accounted for 9 percent of total sales, according to the NAR. Housing inventory fell 1.8 percent to 2.13 million at the end of October. Homes were on the market for an average of 54 days before being sold, up from 50 days in September. First-time buyers represented less than one-third of all existing-home purchases in October, unchanged from the previous month. Single-family sales fell 4.1 percent, while condominium and co-op sales jumped 3.3 percent.
As buyers exited the market, confidence among homebuilders declined, hitting a four-month low in November. The impact of rising mortgages and stagnating purchasing power may stall momentum in the housing market, which could harm the pace of US recovery.
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