U.S. New-Home Sales Plunge as Mortgage Rates Rise
Source: Associated Press
(WASHINGTON) Americans cut back sharply in July on their purchases of new homes, a sign that higher mortgage rates may weigh on the housing recovery.
The Commerce Department said Friday that U.S. sales of newly built home dropped 13.4 percent to a seasonally adjusted annual rate of 394,000. Thats the lowest pace in nine months. And it is down from a rate of 455,000 in June, which was revised sharply lower from a previously reported 497,000.
New-home sales have risen 7 percent in the 12 months ending in July. The annual pace remains well below the 700,000 that is consistent with a healthy market.
The housing market has been one of the strongest performers this year in an otherwise sluggish economy, helped by steady job gains and low mortgage rates. But mortgage rates have risen a full percentage point since May and have started to steal some of the markets momentum.
Read more: http://business.time.com/2013/08/23/u-s-new-home-sales-plunge-as-mortgage-rates-rise/#ixzz2co5Nuvlw
geek tragedy
(68,868 posts)and buy homes while rates were lower. So, the rates created a temporary burst in activity followed by a temporary lull to bring things back into equillibrium.
Eventually, the market will return to something approaching normalcy.
itsrobert
(14,157 posts)It takes awhile for the industry to gear up for the new demand. Many projects were put on hold and it takes awhile for new housing areas to get approved by the local authorities.
geek tragedy
(68,868 posts)without knowing they could find somewhere to live afterwards.
Inventory has to climb before things settle down.
reformist2
(9,841 posts)The one thing that nobody* wants is the one thing that will cure the market - lower sticker prices.
*By nobody I mean the people who already own homes. Remarkably, the press never seems to care much about first-time homebuyers.
geek tragedy
(68,868 posts)Ownership/renting costs are not out of whack anymore.
reformist2
(9,841 posts)And rents will drop along with them. The RE market is the last financial bubble.
itsrobert
(14,157 posts)That would mean my home needs to drop at least 50 percent in your assessment?
Hosnon
(7,800 posts)by 30% in two years?
If so, what is the source of the increase? Did you do massive upgrades?
itsrobert
(14,157 posts)That's usually the standard to assess a property.
Hosnon
(7,800 posts)itsrobert
(14,157 posts)n/t
geek tragedy
(68,868 posts)we can do it
(12,116 posts)Prices are ridiculously low...Banks are still not allowing many to buy that should be able to.
Supersedeas
(20,630 posts)magical thyme
(14,881 posts)We needed a place to live. We bought what we could afford in the old economy.
What will cure the market -- not just the housing market -- but the economy overall, is for companies to pay is a living wage in *this* country, not what passes for a living wage in Bangladesh.
tofuandbeer
(1,314 posts)the housing market would improve, along with everything else.
onehandle
(51,122 posts)That's all I got.
PasadenaTrudy
(3,998 posts)Jesus Malverde
(10,274 posts)Mosby
(16,158 posts)The National Association of Realtors said on Wednesday that existing home sales jumped 6.5 percent to an annual rate of 5.39 million units.
That was above analysts' expectations and could make the Federal Reserve more comfortable with its plans to wind down a major economic stimulus program. Plans to end the program have already pushed mortgage rates higher.
While some of July's surge in home resales may reflect buyers rushing to lock in rates before they rise further, the data inspired some confidence that the housing recovery was strong enough to withstand higher borrowing costs.
http://www.reuters.com/article/2013/08/21/us-usa-economy-housing-idUSBRE97K0ON20130821
Rates are still very low historically, maybe the drop in new home sales is due to pricing, and existing homes offer buyers a better value.