Existing-Home Sales Tumble For Third Straight Month--Update
21 September 2017 - 2:48AM
Dow Jones News
By Laura Kusisto and Josh Mitchell
WASHINGTON -- Sales of previously owned homes fell in August to
the lowest level in a year, reflecting a shortage of properties on
the market and a sharp drop in Houston home purchases because of
Hurricane Harvey.
Existing-home sales declined 1.7% from a month earlier to a
seasonally adjusted annual rate of 5.35 million, the National
Association of Realtors said Wednesday. That marked the third
straight monthly drop, with continued declines expected in the
coming months. Sales rose just 0.2% over the 12 months ending in
August.
Economists said that while demand remains strong, sluggish new
construction and the reluctance of owners to put their homes on the
market means there simply isn't much to buy.
"Given the strength of the job market, favorable demographics
and rock-bottom mortgage interest rates that make buying a home
very affordable, the existing-home sales market should be roaring
instead of whimpering," said Svenja Gudell, chief economist at real
estate data provider Zillow.
Existing home sales remain about 82% of what they would normally
be, accounting for population growth, according to an analysis by
home tracker Trulia.
The year started strongly, with many economists predicting that
rising home prices and a strengthening economy would prompt more
sellers to put their homes on the market. Instead, the number of
homes for sale at the end of August declined 2.1% from a month
earlier and is 6.5% lower than a year ago.
"We had high hopes beginning the year but those have been
smashed with a steel-toed boot," Ms. Gudell said.
Lawrence Yun, the Realtors' chief economist, now projects that
sales for all of 2017 will decline from 2016, largely because of
hurricanes Harvey and Irma, which have slowed sales in the
South.
Hurricane Harvey packed an additional punch to the housing
market in August, as buyers battling historic floods were in no
position to close on home purchases. Sales in Houston plunged 25%
in August, which was the first decline in almost a year, the
Houston Association of Realtors said last week.
"Home sales were humming throughout the first three weeks of
August, but the moment Harvey struck the region, everything came to
a screeching halt," Cindy Hamann, chair of the Houston Association
of Realtors, said in a release last week.
Mr. Yun estimated that overall sales would have been flat from
the previous month without the hurricane effects.
Economists said the impact of both Harvey and Hurricane Irma
will continue to play out over the next couple of months. But most
said they expect the Houston market to recover after that.
"We would expect to see a significant decline in home sales or
closings for a couple of months, but if Katrina is any example it
rebounds very strongly when things get back to normal," said Mark
Fleming, chief economist at First American Financial Corp.
Others were less sanguine. "Once the damages are fully assessed,
people are really going to start to realize how susceptible a large
investment is going to be to these kinds of disasters," said Cheryl
Young, a senior economist at Trulia.
Mr. Yun said broader factors are weighing on the market.
Inventory remains tight, in part because of lackluster home
construction, and that has contributed to a run-up in home prices,
pricing out potential buyers.
The median price of homes sold last month reached $253,500, up
5.6% from a year earlier. That was more than double the growth in
Americans' incomes.
It has gotten easier to get a mortgage in recent months, but
Sanjiv Das, chief executive of Caliber Home Loans, said he still
encounters many would-be purchasers who struggle to get
conventional loans because their credit was bruised during the
recession.
Write to Laura Kusisto at laura.kusisto@wsj.com and Josh
Mitchell at joshua.mitchell@wsj.com
(END) Dow Jones Newswires
September 20, 2017 12:33 ET (16:33 GMT)
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