Purchases of previously-owned U.S. homes fell in October to the lowest level in four months as limited supply and higher mortgage rates restrained momentum in the housing-market recovery.
Sales dropped 3.2 percent to a 5.12 million annual rate, the fewest since June, according to data released today by the National Association of Realtors in Washington. The median forecast of 76 economists surveyed by Bloomberg projected a 5.14 million pace. The partial federal shutdown last month may have delayed some closings, the group also said.
Concern that fiscal gridlock in Washington will damage the economy combined with the increase in borrowing costs amid expectations Federal Reserve policy makers will soon dial back monetary stimulus have slowed the rebound in housing. Sustained payroll gains would help repair confidence and enable more Americans to buy real estate.
“The housing data has downshifted in recent months, presumably because of the pop in mortgage rates beginning in the spring,” Thomas Simons, an economist at Jefferies LLC in New York, said in an e-mailed note. “Low inventories may also be impeding sales.”
Sales forecasts in the Bloomberg survey ranged from 4.9 million to 5.35 million. The September reading was unrevised at 5.29 million pace.
The median price of an existing property increased 12.8 percent in October from the year before to $199,500, today’s figures showed.
The jump in property values reflects a changing in the “mix” of sales toward higher-end properties, NAR Chief Economist Lawrence Yun said at a press conference as the figures were released. There is a very limited supply of houses priced at $100,000 or less, leading to a 16 percent drop in sales in that category over the past year, he said. In contrast, sales of homes costing $250,000 or more are up 20 percent to 30 percent over the same period, he said.