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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 
economy.

   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.


(KA)

 
 
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