WASHINGTON – The National Association of Realtors reports on sales of existing homes in September. The report is scheduled to be released Tuesday at 10 a.m. Eastern.
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SLIGHT SALES BUMP: Economists believe that sales rose 1 percent to a seasonally adjusted annual rate of 5.1 million last month, according to a survey by data firm FactSet. The Realtors reported an annual sales rate of 5.05 million in August, a 1.8 percent decrease compared with the prior month as real estate investors pulled back.
TOUGH 2014: Sales this year have fallen behind last year's pace. Because of tight credit, rising home prices and relatively stagnant incomes, home-buying was off 5.3 percent during the 12 months ended in August.
The Realtors project that 4.94 million existing homes will be sold this year, down 3 percent from 5.09 million in 2013. Analysts generally associate sales of roughly 5.5 million existing homes with a healthy market.
First-time buyers have yet to filter back into the market, while many homeowners are still coping with the fallout from the meltdown in home prices that began roughly seven years ago. And prices continue to recover from the depths of that housing bust, growing at double digit levels in many markets last year.
Yet median household incomes have yet to rebound and remain below their 2007 levels after adjusting for inflation. Limited income growth has cut into the cash flow and down payment savings needed to purchase a home. The federal regulator overseeing mortgage giants Fannie Mae and Freddie Mac is considering an option for lower down payments, so that more people can qualify for a mortgage.
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More buyers may also return the market after the average 30-year fixed rate mortgages dropped below 4 percent last week, down more than half a percentage point from the start of 2014. Still, average rates were as low as 3.34 percent In January 2013, and there are few signs that home sales will surge any time soon.
A separate Realtors index tracking the number of signed contracts to purchase a home slipped in August, falling 1 percent compared with the prior month to 104.7. Pending sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale.
Construction data suggests a shift away from home ownership toward renting.
The Commerce Department reported last week that housing starts rose 6.3 percent to a seasonally adjusted annual rate of 1.017 million homes, with almost all of the gains coming from the building of apartments.
Apartment construction has surged 30.3 percent over the past 12 months, almost three times the rate of growth for single-family houses.