Previously owned U.S. home sales declined for the third consecutive month in November to the lowest level of the year as rising mortgage rates and a limited supply of properties discouraged buyers.
Purchases dropped 4.3 percent to a 4.9 million annual rate, the National Association of Realtors reported today in Washington. The median forecast of economists in a Bloomberg survey called for the pace to slow to 5.02 million. Still, the group projects 2013 will be the best year for the industry in seven years, with an estimated 5.1 million properties sold.
Rising prices and borrowing costs have put homes out of reach for many first-time buyers and a partial federal government shutdown in October may have delayed some purchase decisions. At the same time, builder confidence has picked up along with new construction, signaling gains in housing will be sustained.
“Part of the weakness was the government shutdown,” said Brian Jones, senior U.S. economist in New York at Societe Generale. “The vast majority of indicators we’ve gotten on housing are pretty solid.”
Estimates in the Bloomberg survey of 75 economists ranged from 4.9 million to 5.21 million.
Sales declined in all four regions, led by a slump in the West, where a lack of inventory restrained activity. Demand decreased 8.5 percent in the West, 4.1 percent in the Midwest, 3 percent in the Northeast and 2.4 percent in the South.
“It’s a clear loss of momentum,” NAR Chief Economist Lawrence Yun said at a news conference as the figures were released. “Even with the weakening, we expect home sales to be the best in seven years.”
Cash transactions accounted for about 32 percent of all purchases, compared with 30 percent a year earlier, the report showed.
Sales of distressed property, including foreclosures, accounted for 14 percent of the total last month, unchanged from October.
Existing-home sales, which are tabulated when a purchase contract closes, are recovering from a 13-year low of 4.11 million in 2008 after reaching a record 7.08 million in 2005.