U.S. Existing-Home Sales Steadied in August
20 September 2018 - 3:30PM
Dow Jones News
By Sharon Nunn and Sarah Chaney
WASHINGTON-Sales of previously owned U.S. homes held steady in
August after a stretch of weakness in the housing market.
Existing-home sales were flat in August from the previous month
at a seasonally adjusted annual rate of 5.34 million, the National
Association of Realtors said Thursday. Economists surveyed by The
Wall Street Journal had expected sales to notch a 5.38 million
annual rate last month.
Compared with a year earlier, sales in August declined 1.5%.
Lawrence Yun, the trade group's chief economist, said "the
strongest demand our realtors are indicating are in the lower price
points, but sales are down because of lack of inventory."
This year's sales slowdown has stemmed from growing challenges
for the housing market. A shortage of homes for sale at a time when
continued job and wage growth are supporting demand have
contributed to a rapid run-up in home prices.
Meanwhile, mortgage rates have risen in the last year,
increasing the cost of buying a home. The average interest rate on
a 30-year fixed-rate mortgage in August was 4.55%, up from 4.03% in
January, according to Freddie Mac.
The median sale price for an existing home in August was
$264,800, up 4.6% from a year earlier. There was a 4.3-month supply
of homes on the market at the end of August, based on the current
sales pace.
The Trump administration's tax bill also reduced some incentives
for homeownership, especially in costly coastal markets and
high-tax areas, by reducing the cap for the deductibility of
mortgage interest and limiting the amount of state and local taxes
that can be deducted.
Purchases of previously owned homes account for the bulk of U.S.
home-buying activity. The Commerce Department releases data on
August new-home sales next Wednesday.
In another area of the housing market, home construction grew
robustly in August. Still, this was largely because of building for
multifamily housing, while construction in the single-family home
category grew at a slower pace. Meanwhile, a gauge of homebuilder
sentiment flatlined in September after drifting lower for much of
2018.
"With mortgage rates at a seven-year high, home builder
sentiment trending lower, and an increased threat of tariffs
further pressuring existing affordability challenges, the ho-hum
results of August [construction] could very well be the norm for
the foreseeable future," Scott Volling, a principal at PwC, said
after the home construction report was released.
News Corp., owner of The Wall Street Journal, also operates
Realtor.com under license from the National Association of
Realtors.
Write to Sharon Nunn at sharon.nunn@wsj.com and Sarah Chaney at
sarah.chaney@wsj.com.
(END) Dow Jones Newswires
September 20, 2018 10:15 ET (14:15 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.