Housing Market Stalls in September--Update
October 22 2019 - 3:01PM
Dow Jones News
By Laura Kusisto and Harriet Torry
The housing market sputtered in September as a lack of homes for
sale and high prices disrupted what was shaping up as a rebound in
the second half of the year.
Sales of previously owned U.S. homes fell 2.2% in September from
the previous month to a seasonally adjusted annual rate of 5.38
million, the National Association of Realtors said Tuesday.
Home sales rose for two straight months in July and August,
offering hope that a year-long slowdown in the market was turning
around.
Buying conditions had turned more hospitable in recent months,
thanks to falling mortgage rates, a growing selection of homes for
sale and slowing home-price growth. But the latter two factors have
quickly reversed course and dampened home buyer enthusiasm.
"You can sit there and go, 'Oh my god, look how low mortgage
rates are.'" said Tom Lawler, founder of Lawler Economic and
Housing Consulting. "But then you go, 'Look how high home prices
are."
The median sales price for an existing home in September was
$272,100, up 5.9% from a year earlier, the strongest pace of
appreciation since January 2018. The supply of homes on the market
declined 2.7% from a year ago, according to NAR.
"The housing market is in an unbalanced situation" with high
prices and persistent low inventory, said Lawrence Yun, the trade
group's chief economist.
News Corp, owner of The Wall Street Journal, also operates
Realtor.com under license from the National Association of
Realtors.
Mortgage rates have been steadily dropping throughout much of
this year, helping to make buying a home more affordable. The
average interest rate on a 30-year fixed-rate mortgage at the end
of September was 3.64%, down from about 4% six months earlier,
according to Freddie Mac.
The boost from lower mortgage rates may take months to be felt
in the housing market, since it takes buyers a while to find and
then close on a home. Many economists predict the market will
improve slightly through the end of the year. Sales in September
were up 3.9% compared to a year ago, the third straight month of
annual growth.
Yvette Evans, a Redfin agent in Austin, said buyers have been
slow to come back into the market since rates dropped earlier this
year, but she has seen an uptick in activity in the last couple of
weeks.
But she said current owners are reluctant to sell their homes
because prices have risen so much they may not be able to afford a
substantial upgrade. Buyers are also put off by the shortage of
inventory in many desirable neighborhoods, which means they end up
losing repeated bidding wars.
"People get emotionally burned out from not winning, so people
say I'm just going to renew my lease and sit tight," Ms. Evens
said.
She also added, "With interest rates dipping down people were
refinancing instead of moving."
U.S. unemployment dropped to a half-century low in September and
wage growth has been solid, but weakness in manufacturing at home
and abroad have stoked fears of a broader slowdown.
Economists will be watching the housing market closely in the
coming months because it could help buffet the economy against
those concerns. Doug Duncan, chief economist at Fannie Mae, said he
expects housing to contribute to the economy in the coming
months.
"Clearly the overall economy is slowing. Housing is going to
make that slowing less rapid," said.
Write to Laura Kusisto at laura.kusisto@wsj.com and Harriet
Torry at harriet.torry@wsj.com
(END) Dow Jones Newswires
October 22, 2019 14:46 ET (18:46 GMT)
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