U.S. Existing-Home Sales Dropped in September
Existing-home sales fall 3.4%, extending a weak stretch for the housing market
By Sharon Nunn and Sarah Chaney
Oct. 19, 2018 10:05 a.m. ET
WASHINGTON—Sales of previously owned U.S. homes declined in September, extending a weak stretch for the housing market in a period of otherwise strong economic growth.
Existing-home sales fell 3.4% in September from the previous month to a seasonally adjusted annual rate of 5.15 million, the National Association of Realtors said Friday. Economists surveyed by The Wall Street Journal had expected sales to notch a stronger 5.29 million annual rate last month.
Compared with a year earlier, sales in September declined 4.1%.
“Without a doubt there is a clear shift in the market, as evidenced by lower sales and more inventory,” said Lawrence Yun, the trade group’s chief economist. “We’re also seeing soft data in foot traffic. [It] has notably slowed in previously super heated markets.”
This year’s sales slowdown has stemmed from growing challenges for the housing market. A shortage of homes for sale at a time when continued job and wage growth are supporting demand have contributed to a rapid run-up in home prices.
Meanwhile, mortgage rates have risen in the past year and appear to be nearing 5%, a threshold analysts say could deter many from purchasing a home. The average interest rate on a 30-year fixed-rate mortgage in September was 4.63%, up from 4.03% in January, according to Freddie Mac.
The median sale price for an existing home in September was $258,100, up 4.2% from a year earlier. There was a 4.4-month supply of homes on the market at the end of September, based on the current sales pace. This is up from a 4.2-month supply a year earlier.
The Trump administration’s tax bill also reduced some incentives for homeownership, especially in costly coastal markets and high-tax areas, by reducing the cap for the deductibility of mortgage interest and limiting the amount of state and local taxes that can be deducted.
Purchases of previously owned homes account for the bulk of U.S. homebuying activity. The Commerce Department releases data on September new-home sales next Wednesday.
In other another area of the housing market, home construction has faltered. Analysts think builders may be taking a cautious stance because of the overall temperature of the housing market. Meanwhile, readings of home-builder sentiment have pulled back throughout this year.
Nationwide Senior Economist Ben Ayers said he expects “an upward path for both housing starts and new home sales, especially given the tight market for existing homes.”
News Corp., owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors.
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