U.S. home sales tumble as prices race to record high

FILE PHOTO: A real estate sign advertising a home "Under Contract" is pictured in Vienna, Virginia, outside of Washington, October 20, 2014. REUTERS/Larry Downing

By Lucia Mutikani

WASHINGTON (Reuters) – U.S home sales fell more than expected in June as a persistent shortage of properties pushed prices to a record high, suggesting the housing market was struggling to regain speed since hitting a soft patch last year.

Weak housing and manufacturing are holding back the economy, offsetting strong consumer spending. The National Association of Realtors said on Tuesday existing home sales dropped 1.7% to a seasonally adjusted annual rate of 5.27 million units last month. May’s sales pace was revised higher to 5.36 million units from the previously reported 5.34 million units.

“Meager inventory levels, especially in the entry-level segment, and still-rising prices continue to limit the selection of homes available to more budget-conscious buyers,” said Matthew Speakman, an economist at Zillow.

Economists polled by Reuters had forecast existing home sales slipping 0.2% to a rate of 5.33 million units in June. Existing home sales, which make up about 90 percent of U.S. home sales, decreased 2.2% from a year ago. That was the 16th straight year-on-year decline in home sales.

The weakness in housing comes despite cheaper mortgage rates and the lowest unemployment rate in nearly 50 years.

Supply has continued to lag, especially in the lower-price segment of the housing market because of land and labor shortages, as well as expensive building materials. The government reported last week that permits for future home construction dropped to a two-year low in June.

According to the NAR, there was a 19% drop from a year earlier in sales of houses priced $100,000 and below.

The Realtors group said there was strong demand in this market segment, but not enough homes for sale. The NAR also said last year’s revamp of the U.S. tax code, which reduced the amount of mortgage interest payments homeowners could deduct, was weighing on demand for homes priced at $1 million and above.

The 30-year fixed mortgage rate has dropped to an average of 3.81% from a more than seven-year peak of 4.94% in November, according to data from mortgage finance agency Freddie Mac. Further declines are likely as the Federal Reserve is expected to cut interest rates next week for the first time in a decade.

Last month, existing-home sales rose in the Northeast and Midwest. They tumbled in the populous South and in the West.

June’s drop in existing homes sales likely means less in brokers’ commissions, which suggests that housing probably remained a drag on the gross domestic product in the second quarter. Spending on homebuilding contracted in the first quarter, the fifth straight quarterly decline.

The Atlanta Fed is forecasting GDP rising at a 1.6% annualized rate in the second quarter. The economy grew at a 3.1% rate in the January-March period. The government will publish it snapshot of second-quarter GDP on Friday.

The PHLX housing index <.HGX> was little changed, underperforming a broadly firmer U.S. stock market. The dollar held near a five-week high against a basket of currencies. U.S. Treasury prices fell.

HOUSE PRICES RE-ACCELERATE

There were 1.93 million previously owned homes on the market in June, up from 1.91 million in May and unchanged from a year ago. The median existing house price increased 4.3% from a year ago to $285,700 in June, an all-time high. House price inflation had been slowing after a jump in mortgage rates last year dampened demand.

Last month, houses for sale typically stayed on the market for 27 days, up from 26 days in May and a year ago. Fifty-six percent of homes sold in June were on the market for less than a month.

At June’s sales pace, it would take 4.4 months to exhaust the current inventory, up from 4.3 months in May. A six-to-seven-month supply is viewed as a healthy balance between supply and demand.

First-time buyers accounted for 35% of sales last month, up from 32% in May and 31% a year ago. Economists and realtors say a 40% share of first-time buyers is needed for a robust housing market.

(Reporting by Lucia Mutikani; editing by Andrea Ricci)

U.S. pending home sales increase in May

FILE PHOTO: For Sale signs stand in front of houses in a neighborhood in Davenport, Florida, U.S., June 29, 2016. REUTERS/Phelan Ebenhack

WASHINGTON (Reuters) – Contracts to buy previously owned homes increased in May, the National Association of Realtors said on Thursday.

The NAR’s pending home sales index rose to a reading of 105.4, up 1.1% from the prior month. Economists polled by Reuters had forecast pending home sales would rise 1.0%.

April’s index was unrevised at 104.3.

Pending home contracts are seen as a forward-looking indicator of the health of the housing market because they become sales one to two months later.

Compared to one year ago, pending home sales were down 0.7%, marking the 17th straight month of annual decreases.

(Reporting by Jason Lange; Editing by Paul Simao)

U.S. existing home sales surge, boosted by Fed’s signal on rates

FILE PHOTO: An existing home for sale is seen in Silver Spring, Maryland February 21, 2014. REUTERS/Gary Cameron

By Jason Lange

WASHINGTON (Reuters) – U.S. home sales surged in February to their highest level in 11 months, a sign that a pause in interest rate hikes by the Federal Reserve was starting to boost the U.S. economy.

The National Association of Realtors said on Friday existing home sales jumped 11.8 percent to a seasonally adjusted annual rate of 5.51 million units last month.

That was the highest since March 2018 and well above analysts’ expectations of a rate of 5.1 million units. The one-month percentage change was the largest since December 2015. January’s sales pace was revised slightly lower.

February’s surge came as mortgage rates fell following signals from the Federal Reserve that it was no longer eyeing rate hikes. Several years of rising rates had put a brake on parts of the U.S. housing market in 2018.

“(It’s) quite a powerful recovery that’s taking place,” said Lawrence Yun, chief economist with the National Association of Realtors.

Still, the number of sales in February was 1.8 percent lower than a year ago.

The U.S. housing market has also been held back by land and labor shortages, which have led to tight inventory and more expensive homes.

The PHLX Housing Index extended losses following the release of the figures although its decline was less steep than the broader stock market.

The median existing house price increased 3.6 percent from a year ago to $249,500 in February.

Existing home sales rose in three of the country’s four major regions and were unchanged in the Northeast.

There were 1.63 million previously owned homes on the market in February, up from 1.59 million in January.

At February’s sales pace, it would take 3.5 months to exhaust the current inventory, down from 3.9 months in January. A supply of six to seven months is viewed as a healthy balance between supply and demand.

(Reporting by Jason Lange; Editing by Andrea Ricci)

U.S. existing home sales fall sharply to three-year low

FILE PHOTO - A sold sign hangs in front of a house in Dallas, Texas September 24, 2009. REUTERS/Jessica Rinaldi

WASHINGTON (Reuters) – U.S. home sales fell in January to their lowest level in more than three years and house prices rose only modestly, suggesting a further loss of momentum in the housing market.

The National Association of Realtors said on Thursday existing home sales dropped 1.2 percent to a seasonally adjusted annual rate of 4.94 million units last month.

That was the lowest level since November 2015 and well below analysts’ expectations of a rate of 5.0 million units. December’s sales pace was revised slightly higher.

The drop in January came after months of weakness in the U.S. housing market. Existing home sales were down 8.5 percent from a year ago.

The U.S. housing market has been stymied by a sharp rise in mortgage rates since 2016 as well as land and labor shortages. That has led to tight inventory and more expensive homes.

At the same time, the 30-year fixed mortgage rate has dipped in recent months and house price inflation is slowing.

The median existing house price increased 2.8 percent from a year ago to $247,500 in January. That was the smallest increase since February 2012.

Last month, existing home sales fell in three of the country’s four major regions, rising only in the Northeast.

There were 1.59 million previously owned homes on the market in January, up from 1.53 million in December.

At January’s sales pace, it would take 3.9 months to exhaust the current inventory, up from 3.7 months in December. A supply of six to seven months is viewed as a healthy balance between supply and demand.

(Reporting by Jason Lange; Editing by Paul Simao)

U.S. new home sales jump, median price surges to record high

A view of single family homes for sale in San Marcos, California October 25, 2013. REUTERS/Mike Blake

By Lindsay Dunsmuir

WASHINGTON (Reuters) – New U.S. single-family home sales rose in May and the median sales price surged to an all-time high, suggesting the housing market had regained momentum.

The Commerce Department said on Friday new home sales increased 2.9 percent to a seasonally adjusted rate of 610,000 units last month. April’s sales pace was also revised sharply higher to 593,000 units from 569,000 units.

Economists polled by Reuters had forecast new home sales, which make up about 10 percent of all home sales, rising 5.4 percent to a pace of 597,000 units last month. Sales were up 8.9 percent on a year-on-year basis in May.

“While the data quality of the new home sales report is notoriously poor, the general picture from this report and the existing home sales report is one of solid housing demand in the important spring selling season,” said Michael Feroli, an economist with J.P. Morgan.

The housing market has been bolstered by continued strong job growth. The unemployment rate fell to a 16-year low of 4.3 percent in May and mortgage rates are still favorable by historical standards.

However, an increase in the cost of building materials and shortages of lots and labor have crimped homebuilding. With demand outstripping supply, house prices remain elevated.

The median house price rose to a record high of $345,800 in May, from $310,200 in the prior month. The average sales price last month was $406,400, also a record high.

The U.S. dollar pared losses against the yen after the data. U.S. stocks were trading modestly higher while prices of U.S. Treasuries edged up.

Across the nation’s four regions, new home sales were mixed. They fell 25.7 percent in the Midwest and 10.8 percent in the Northeast, but rose 13.3 percent in the West and 6.2 percent in the South, which accounts for a large share of the housing market.

The inventory of new homes on the market increased 1.5 percent to 268,000 units last month.

At May’s sales rate, it would take 5.3 months to clear inventory, unchanged from April. A six-month supply is seen as a healthy balance between supply and demand.

(Reporting by Lindsay Dunsmuir; Editing by Paul Simao)

U.S. pending home sales drop for second straight month

A U.S. flag decorates a for-sale sign at a home in the Capitol Hill neighborhood of Washington, August 21, 2012. REUTERS/Jonathan Ernst

WASHINGTON (Reuters) – Contracts to buy previously owned U.S. homes fell for a second straight month in April amid a supply squeeze, but the housing market recovery remains supported by a strong labor market.

The National Association of Realtors said on Wednesday its Pending Home Sales Index, based on contracts signed last month, dropped 1.3 percent to 109.8.

Economists had forecast pending home sales rising 0.5 percent last month. Pending home sales fell 3.3 percent from a year ago. That is the first year-on-year drop since last December and the largest since June 2014.

“Much of the country for the second straight month saw a pullback in pending sales as the rate of new listings continues to lag the quicker pace of homes coming off the market,” said NAR chief economist Lawrence Yun. “Realtors are indicating that foot traffic is higher than a year ago.”

Pending home contracts become sales after a month or two, and last month’s fall suggested a further decline in home resales after they dropped 2.3 percent in April.

Demand for housing is being driven by a tight labor market, marked by a 4.4 percent unemployment rate, which is generating wage increases and boosting employment opportunities for young Americans.

Sales activity, however, remains constrained by tight inventories, which are driving up home prices. Housing inventory has dropped for 23 straight months on a year-on-year basis.

Pending home sales fell in the Northeast, Midwest and South last month, but surged 5.8 percent in the West.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

U.S. new home sales hit seven-month high; jobless claims rise

A job seeker fills out an application at the King Soopers grocery store table at a job fair at the Denver Workforce Center in Denver, Colorado, U.S. February 15, 2017. REUTERS/Rick Wilking

By Lucia Mutikani

WASHINGTON (Reuters) – New U.S. single-family home sales jumped to a seven-month high in February, suggesting the housing market recovery continued to gain momentum despite the challenges of high prices and tight inventories.

Other data on Thursday showed an unexpected increase in the number of Americans filing for unemployment benefits last week. Still, the labor market continues to tighten, which together with the strength in housing, should underpin economic growth.

The Commerce Department said new home sales increased 6.1 percent to a seasonally adjusted annual rate of 592,000 units last month, the highest level since July 2016. Sales have now recouped the sharp drop suffered in December.

Economists had forecast new home sales, which account for about 9.7 percent of the overall market, rising 0.7 percent to a rate of 565,000 units in February. Sales were up 12.8 percent compared to the same month last year, showing the housing market’s resilience.

Last month’s sales were likely partially buoyed by unseasonably warm weather. Although mortgage rates have risen and may go higher, most economists see a limited impact on housing because a tightening labor market is improving employment opportunities for young adults.

In a separate report, the Labor Department said initial claims for state unemployment benefits increased 15,000 to a seasonally adjusted 258,000 for the week ended March 18.

Claims have now been below 300,000, a threshold associated with a healthy labor market for 80 straight weeks. That is the longest stretch since 1970 when the labor market was smaller. The job market is currently near full employment.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose only 1,000 to 240,000 last week.

U.S. stocks were mostly flat as investors focused on whether the House of Representatives would pass a Republican-sponsored bill to begin dismantling Obamacare, which is seen as the first significant policy test for President Donald Trump.

Prices of U.S. Treasuries were trading lower while the dollar <.DXY> was stronger against a basket of currencies.

LABOR MARKET FIRMING

The claims data covered the period during which the government surveyed employers for March’s nonfarm payrolls report. The four-week average of claims fell 7,750 between the February and March survey weeks, suggesting another month of strong job gains.

Job growth has averaged 209,000 per month over the past three months and the unemployment rate is at 4.7 percent, close to the nine-year low of 4.6 percent hit last November. Tightening labor market conditions and rising inflation enabled the Federal Reserve to raise interest rates last week.

The market for new houses is benefiting from a shortage of properties for sale. A report on Wednesday showed a 3.7 percent drop in sales of existing homes in February amid tight inventories and rising house prices. The 30-year fixed mortgage rate is currently around 4.30 percent.

Last month, new single-family homes sales surged 30.9 percent to their highest level since November 2007 in the Midwest and increased 3.6 percent in the South. They jumped 7.5 percent in the West but slumped 21.4 percent in the Northeast.

The inventory of new homes on the market increased 1.5 percent to 266,000 units last month, still less than half of what it was at its peak during the housing boom in 2006.

At February’s sales pace it would take 5.4 months to clear the supply of houses on the market, down from 5.6 months in January.

A six-month supply is viewed as a healthy balance between supply and demand. The median price for a new home fell 4.9 percent to $296,200 in February from a year ago.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. home sales near 10-year high as mortgage rates rise

Homes for sale in Oregon

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. home resales unexpectedly rose in November, reaching their highest level in nearly 10 years, likely as buyers rushed into the market to lock in mortgage rates in anticipation of further increases in borrowing costs.

The third straight monthly increase in existing home sales, reported by the National Association of Realtors on Wednesday, suggested housing would contribute to economic growth in the fourth quarter after being a drag in the previous two quarters.

“The strength in home sales, if it holds, will provide a big boost for consumer spending in 2017 and makes us more confident about our outlook for stronger growth next year,” said Chris Rupkey, chief economist at MUFG Union Bank in New York.

Existing home sales increased 0.7 percent to an annual rate of 5.61 million units last month, the highest sales pace since February 2007. October’s sales pace was revised down to 5.57 million units from the previously reported 5.60 million units.

Economists had forecast sales slipping 1.0 percent toa 5.50 million-unit pace in November. Sales were up 15.4 percent from a year ago. They rose in the Northeast and South, but fell in the Midwest and West last month. Mortgage rates have surged in the wake of Donald Trump’s victory in the Nov. 8 presidential election. Trump’s proposal to increase infrastructure spending and slash taxes is seen as inflationary.

Since the election, the interest rate on a fixed 30-year mortgage has increased about 60 basis points to an average 4.16 percent, the highest level since October 2014, according to data from mortgage finance firm Freddie Mac.

Mortgage rates are expected to rise further after the Federal Reserve raised its benchmark overnight interest rate last week by 25 basis points to a range of 0.50 percent to 0.75 percent. The U.S. central bank forecast three rate hikes next year.

The prospect of higher mortgage rates could be pushing undecided buyers into the market. But the combination of higher borrowing costs and rising house prices, which are outstripping wage growth, could hurt home sales.

House prices have been marching ahead amid a chronic shortage of properties for sale. The median house price was $234,900 last month, a 6.8 percent increase from a year ago.

Economists, however, expect higher mortgage rates to have a minimal impact on home sales as the labor market nears full employment and the economy strengthens.

‘AT A CROSSROADS’

“This is a housing market at a crossroads,” said Stephen Phillips, president of Berkshire Hathaway Home Services in California.

“The higher mortgage rates we’ve seen since the election will likely slow activity and price increases, but faster income growth might more than offset that trend as we look toward next year’s spring market.”

A separate report from the Mortgage Bankers Association on Wednesday showed applications for loans to buy a home increased 3 percent last week from the previous week.

The dollar <.DXY> was trading lower against a basket of currencies after the data, while prices for U.S. government bonds rose. U.S. stocks were slightly weaker, with the Dow Jones industrial average <.DJI> still hovering near the 20,000 mark.

The PHLX housing index <.HGX> rose 0.30 percent as shares in the nation’s largest homebuilder, D.R. Horton Inc <DHI.N>, gained 0.32 percent.

Last month’s increase in home resales means more brokers’ commissions, which are included in the residential component of the gross domestic product report.

The Atlanta Fed is forecasting GDP rising at a 2.6 percent annual rate in the fourth quarter. The economy grew at a 3.2 percent pace in the July-September period.

Existing home sales remain constrained by a persistent shortage of properties available for sale. Last month, the number of unsold homes on the market fell 8.0 percent from October to 1.85 million units.

Supply was down 9.3 percent from a year ago and has now declined for 18 straight months on a year-on-year basis. At November’s sales pace, it would take 4.0 months to clear the stock of houses on the market, down from 4.3 months inOctober. A six-month supply is viewed as a healthy balance between supply and demand.

Housing inventory could remain an obstacle, with a report last week showing a plunge in home construction in November. With supply tightening, house prices notched their 57th consecutive month of year-on-year gains in November.

Rising house prices are increasing equity for homeowners and encouraging some to put their homes on the market, but making it more difficult for first-time buyers to purchase homes.

First-time buyers accounted for 32 percent of transactions last month, well below the 40 percent share that economists and realtors say is needed for a robust housing market.

(Reporting by Lucia Mutikani; Editing by Paul Simao)