Younger people unable help housing market growth could his be carney in the coal mine. This article is two hour old ECONOMY U.S. Home Sales Falter as Investors Pull Back Housing Market Hit Soft Patch in August After a Brisk Summer By JOSH MITCHEL Updated Sept. 22, 2014 11:30 a.m. ET Existing-home sales fell in August as the housing market hit a soft patch. Here, a contractor works a new apartment building in downtown Seattle over the summer. Bloomberg WASHINGTON—The U.S. housing market lost momentum in August as investors pulled away, weighing on existing-home sales and raising doubts about the sectors underlying strength. Sales of previously owned homes fell 1.8% from July to an annual rate of 5.05 million, the National Association of Realtors said Monday. That ended four months of gains and pushed sales down 5.3% from a year earlier. The decline reflected fewer investor purchases, whose share of overall sales fell from 16% in July to 12%, the lowest level since late 2009. Lawrence Yun, NARs chief economist, said investors may be getting skittish about the prospect of higher interest rates as the Federal Reserve winds down a bond-buying program that was designed to pump up the economy. There are also fewer distressed properties, such as those in foreclosure, for investors to quickly snap up. From here, momentum in the market will hinge largely on growing demand from traditional home buyers who typically need a mortgage, including first-time buyers, Mr. Yun said. But lenders are still imposing tight credit underwriting standards, preventing many families from obtaining a home loan, he said. I do believe there is sizeable pent-up demand—its just a matter of when it will get released, Mr. Yun said, Prospective buyers face other obstacles—including stagnant incomes and prices that hurt affordability—that could lead to a choppy recovery through the year. We think home sales are running out of steam now that the post-winter rebound is over and the buyers for distressed properties fade away, Ian Shepherdson, chief economist of Pantheon Macroeconomics, said in a note to clients. But first-time buyers could find it easier to purchase homes in coming months as competition from investors—who can push up prices with all-cash offers—declines. More New Mortgage Loans Fell 11% in 2013 The Outlook: Should Mortgage Lending Standards Ease? Cash Home Sales, While High, Are Falling Rate of Americans Starting Households Disturbingly Slow Home sales rose sharply in 2012 and the first half of 2013 before losing momentum due to a run-up in interest rates and prices. But the sector regained traction this year, thanks to a retreat in interest rates and robust job growth. Mortgage rates have hovered just above 4%, a historically low level, for much of the summer before clicking up to 4.23% last week. Sales still havent returned to their July 2013 level of a 5.38 million pace. Mondays report suggested tight inventory may be weighing on sales. The number of for-sale homes has risen 4.5% over the past year to 2.31 million in August, but the level is still low by historical standards. Economists say many prospective buyers want to see more options than the market currently offers before they sign a contract. At the current pace, it would take 5.5 months to exhaust the supply of homes for sale. Home prices continue to rise, but at a more moderate pace compared with earlier in the housing recovery. The median sale price for a home last month was $219,000, up 4.8% from a year earlier. Other signs point to a pickup in the housing market. Optimism among home builders reached the highest level since late 2005 this month on signs of higher demand, the National Association of Home Builders reported last week. And despite a decline last month, residential construction is running higher from a year ago. That partly reflects an increase in Americans starting their own households after living with others during the weak recovery.
Posted on: Mon, 22 Sep 2014 18:05:24 +0000
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