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WASHINGTON – US home sales declined for the sixth consecutive month in September, signaling that housing has become a weak point in the economy.
The National Association of Realtors said yesterday that sales fell 3.4% last month, the biggest drop in two and a half years, to reach a seasonally adjusted annual rate of 5.15 million euros. This is the lowest sales pace since November 2015.
Hurricane Florence led to a drop in sales in North Carolina, but even excluding the effects of the storm, sales would have dropped more than 2 percent, NAR said. After having reached their highest level in a decade last year, existing home sales have steadily decreased in 2018 due to rapid price increases, rising mortgage rates and a shortage of available housing. .
Nevertheless, analysts are generally optimistic about the economy as a whole. Most growth forecasts will reach 3% on an annual basis between July and September, following a strong 4.2% expansion in the second quarter.
"Housing is no longer a drag on the economy, but headwinds blow very slowly," said Michelle Meyer, an economist at Bank of America Merrill Lynch, before the report was released.
Housing should further weaken in the coming months. The weakness in September came before mortgage rates rose again this month to reach their highest level in seven years. Sales fell 4.1% in September from a year ago.
"There is no doubt that the market has changed dramatically," said Lawrence Yun, chief economist at the National Association of Realtors.
A sign of change is that the demand for existing homes is slowing down. Housing prices are increasing at a slower pace and the supply of housing available, although low, is increasing. Buyers' traffic has also declined, Yun said.
In addition, as rents are also stabilizing in many cities, many potential buyers may not feel as much pressure to buy a new home.
"Renting itself can be seen as a better deal, as rising mortgage interest rates, the steady rise in house prices, and weak wage growth are hurting the financial advantage of homeowners." a typical mortgage, "said Aaron Terrazas, senior economist at Zillow Real Estate Data Provider.
The most expensive homes are also experiencing slower sales, a change from the beginning of this year, as slowing sales were concentrated in lower-priced, mid-priced homes. Houses sold at $ 1 million or more saw their sales fall by 2% over the previous year.
Higher borrowing costs make housing less affordable. The average rate of a 30-year fixed mortgage has decreased this week but has remained near the peak of 7.85% recorded for seven years. A year ago, it rose to 3.88%.
There are also signs that homeowners are becoming less willing to sell up mortgage rates. This is because many have rates below 4%. The sale of a house and the purchase of a new home would therefore require them to accept a higher rate.
Real estate agents surveyed consumers and found that 16 percent are not willing to give up their mortgage rate and buy a new home. This represents a typical level of 10%.
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