Home sales decline 4th month what does it mean?

Higher rates, prices cut pending home sales

Stories You Might Like

• Microsoft deferred sales, bookings raise eyebrows
• Two dead as 'St. Jude' storm hits the U.K.
• Foreclosures dog even wealthiest home buyers

8 Comments

8
inShare

new

Watchlist Relevance

LEARN MORE

Want to see how this story relates to your watchlist?
Just add items to create a watchlist now:

• X
  10 Year Treasury Note (10_YEAR)
• X
  Freddie Mac (FMCC)

or Cancel Already have a watchlist? Log In

By Ruth Mantell, MarketWatch

WASHINGTON (MarketWatch) — Higher home prices and mortgage rates took a bite out of the housing market’s rebound in September, driving a gauge of upcoming home sales to its lowest level in nine months, according to data released Monday.

Pending sales of homes dropped 5.6% in September, and were down 1.2% from the year-earlier period, according to the National Association of Realtors. September is the first period in more than two years that pending sales weren’t greater than year-earlier levels.
“This tells us to expect lower home sales for the fourth quarter, with a flat trend going into 2014,” said Lawrence Yun, NAR’s chief economist.
Despite the recent slowdown, NAR expects sales of existing homes this year to be up 10% from 2012.
In recent months would-be home buyers faced a handful of challenges: rising and volatile mortgage rates, escalating prices, and a divided Congress that partially shut down the government and worried consumers and investors about the U.S. as a borrower and economic leader. Longer-term challenges facing the housing market come from ongoing high unemployment and strict credit standards that are preventing some creditworthy borrowers from obtaining loans.
Officials are trying to tread lightly to avoid disrupting the housing market’s progress. The Federal Reserve recently decided not to start tapering its monthly asset purchases that have kept long-term rates low. The Fed is meeting this week, and observers expect the central bank to maintain its $85-billion-a-month asset-purchase program.
“The data suggest sluggish home sales going into the end of the year and are sending a warning signal to the Fed as they meet this week that the housing recovery might not be self-sustaining yet and even modest rate fluctuations can considerably affect demand,” said Yelena Shulyatyeva, an economist at BNP Paribas.
Mortgage rates hit a recent trough in early May, with the average rate for a 30-year fixed-rate mortgage as low as 3.35%, according to federally controlled mortgage buyer Freddie Mac /quotes/zigman/226335/quotes/nls/fmcc FMCC +7.73% . Market speculation about the Fed tapering its asset purchases pushed up that rate by more than one percentage point by the end of June. In August, the rate reached 4.58%, up 1.23 points from early May. Pricier monthly mortgage payments force some consumers to scale back their purchase plans.
In addition, home buyers have seen purchase prices rushing higher. CoreLogic, an Irvine, Calif.-based analysis firm, recently reported that home prices in August were up 12.4% from a year earlier, the fastest annual pace since February 2006.
The good news for buyers is that rates have declined in recent weeks, with the average rate for a 30-year fixed-rate mortgage recently hitting 4.13%. Still, NAR reported that housing affordability has hit a five-year low.

/quotes/zigman/226335/quotes/nls/fmcc

Add to portfolio FMCC

Freddie Mac

US : OTCBB

$ 2.23

+0.16 +7.73%

Volume: 11.04m

Oct. 28, 2013 11:48a

P/E Ratio

N/A

Dividend Yield

N/A

Market Cap

$1.35 billion

Rev. per Employee

$15.58M

Ruth Mantell is a MarketWatch reporter based in Washington. Follow her on Twitter @RuthMantell.