|
Existing home sales lower
|
 |
September 24, 1999: 12:11 p.m. ET
August decline of 2.8% in annual rate seen reflecting higher loan costs
|
NEW YORK (CNNfn) - Sales of existing homes fell for a second straight month in August, a realtors' group said Friday, suggesting that rising borrowing costs are beginning to slow the U.S. housing boom.
Sales declined 2.8 percent in August to an annual rate of 5.25 million units, according to the National Association of Realtors. Analysts polled by Reuters were expecting a 2.6 percent drop to 5.27 million units.
Compared with a year earlier, sales rose 4.8 percent.
Since reaching a record in June, existing home sales have slipped almost 7 percent as higher mortgage rates -- a reflection of two Federal Reserve rate rises since June and rising yields on government bonds -- stifle new home buying, analysts and economists said.
Passed its prime?
That trend may continue through the remainder of the year and into early 2000, as potential buyers re-evaluate whether they want to commit to signing on the dotted line in the face of higher borrowing costs and rising real estate prices, said Steven Wood, an economist with Bank of America in San Francisco.
"Housing activity, which has contributed significantly to economic growth over the past 2-1/2 years, has now passed its peak and will be largely neutral to negative over the next several quarters," Wood said. "This slowdown will be welcomed at the Federal Reserve."
But not all analysts agreed. While higher mortgage rates and anecdotal evidence of labor and construction materials shortages portend a slowdown in the months ahead, the underlying trend should remain strong, said Tracy Cone, an analyst with Standard & Poor's MMS in San Francisco.
"With consumer confidence at healthy levels, (and) income and employment growth continuing at a solid pace, consumers' appetites for housing have shown few signs of moderation," she said.
Sales slip in South
For the week ending Sept. 24, the average rate on U.S. 30-year fixed-rate mortgages was 7.76 percent, down from 7.82 percent a week earlier, the mortgage firm Freddie Mac reported Thursday. A year earlier the rate was 6.64 percent. The rate hit a generational low of 6.49 percent in October 1998.
Home resales slipped 12.1 percent in the West to a 1.31 million-unit annual rate last month and declined 1 percent in the South to a 2.05 million annual pace, the group said. Resales were unchanged in the Midwest at an annual pace of 1.18 million and rose 7.6 percent in the Northeast to a annual 710,000-unit pace.
However, "the decline was not evenly spread across the country, suggesting local factors played more of a role in the monthly setback than overall reduced housing demand," said Sherry Cooper, chief economist with Toronto-based Nesbitt Burns Inc.
The median price of a home rose to $137,700 in August from $136,000 in July. The supply of homes for sale rose to 5.1 months from 4.5 months.
|
|
|
|
|
 |
|
