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US Home Sales Fall For 6th Month 10/22 07:16
U.S. home sales fell for the sixth straight month in September, a sign that
housing has increasingly become a weak spot for the economy.
WASHINGTON (AP) -- U.S. home sales fell for the sixth straight month in
September, a sign that housing has increasingly become a weak spot for the
The National Association of Realtors said Friday that sales declined 3.4
percent last month, the biggest drop in 2 years, to a seasonally adjusted
annual rate of 5.15 million. That's the lowest sales pace since November 2015.
Hurricane Florence dragged sales in North Carolina, but even excluding the
storm's effects, sales would have fallen more than 2 percent, the NAR said.
After reaching the highest level in a decade last year, sales of existing homes
have declined steadily in 2018 amid rapid price increases, higher mortgage
rates and a tight supply of available houses.
Housing will likely weaken further in the coming months, weighing on
economic growth. September's weakness came before mortgage rates jumped further
this month to their highest levels in seven years. Sales fell 4.1 percent in
September from 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 shift is that demand for existing homes is slowing. Home
prices are rising at a slower rate and the supply of available houses, while
low, is increasing. Buyer traffic has also declined, Yun said.
And with rents also stabilizing in many cities, many would-be buyers may not
feel as much pressure to buy a new home.
"Renting itself may be seen as a better bargain as rising mortgage interest
rates, still-rising home prices and sluggish wage growth dent the affordability
advantage of a typical mortgage," said Aaron Terrazas, senior economist at real
estate data provider Zillow.
Although housing is unlikely to add to growth this year, analysts are still
mostly optimistic about the broader economy.
"Housing is no longer a tail wind for the economy, but the headwinds are
blowing very gently," said Michelle Meyer, an economist at Bank of America
Merrill Lynch, before the report was released.
Sales have fallen by the most in the West, where most of the nation's
hottest real estate markets are located and where prices have soared for
several years. Sales tumbled 12.2 percent in that region in the past year,
compared with just 5.6 percent in the Northeast and 1.5 percent in the Midwest.
They dropped just 0.5 percent in the South from a year earlier, despite a sharp
decline in September due to Hurricane Florence.
The highest-priced homes are also reporting slower sales, a shift from
earlier this year, when sales slowdowns were concentrated in mid-priced and
cheaper homes. Homes priced at $1 million and higher saw sales drop 2 percent
from a year ago.
Higher borrowing costs are making housing less affordable. The average rate
on a 30-year fixed mortgage slipped this week but remained near a seven-year
high of 4.85 percent. A year ago, it stood at 3.88 percent.
There are also signs that home owners are increasingly unwilling to sell as
mortgage rates rise. That's because many have rates below 4 percent, so selling
a home and buying a new one would require them to accept a higher rate.
The Realtors surveyed consumers and found that 16 percent are unwilling to
give up their mortgage rate and buy a new home. That's up from a typical level
of 10 percent.