Sales in the largest category of U.S homes dropped in September for the first time in three months, retreating from the best showing in almost four years in July and August, as rising mortgage rates, soaring prices and weak employment, inhibited buyers.
Purchases fell 1.9% to a 5.29 million annualized rate according to the National Association of Realtors in Washington, from 5.39 million in the prior two months. Economists in the Reuters survey had predicted a 5.30 million pace. August’s result was revised lower to 5.39 million from 5.48 million.
Higher prices are adding to the drag imposed by mortgage rates. The nationwide median price for an existing home was 11.7 percent higher in September over that of a year ago and yet that was the slowest pace in five months. In August prices were 13.4 percent higher on the year, the biggest gain in almost eight years.
The median price of a previously occupied home rose to $199,200 in September down from $209,700 in August but up from $178,300 a year ago.
Interest rates for a 30 year fixed rate mortgage across the country have risen from 3.40 percent in early May to 4.23 percent yesterday according to bankrate.com. They peaked at 4.67 percent in early September.
There were 2.21 million previously occupied homes listed for sale in September, the same as in August, down from 2.24 in July but higher than the post-recession low of 1.77 million in January. These houses would take 5.0 months to clear at the current selling pace, up from 4.9 months in August. The 4.3 month clearing time in January was a six year low.
Existing home sales are calculated when the home changes owners at the contract closing. Pending home sales, another closely followed housing statistics, charts the number of signed contracts in a particular month and is a leading indicator for existing homes. A certain portion of pending sales never become existing sales, usually because the buyers were unable to obtain a mortgage.
Chief Market Strategist
WorldWideMarkets Online Trading