Categories Analysis, U.S. Markets News
Affordability takes a beating as home prices, mortgage rate zoom
A key area of the economy that remained subdued this year is the housing sector, even while overall growth gathered momentum. The primary factors that dissuade prospective buyers from owning a house are the rising prices and interest rates. Affordability is further squeezed by high mortgage costs, while the unfavorable inventory situation adds to the overall housing slump.
However, data published by the National Association of Realtors on Thursday came as a relief to the ailing sector, revealing an unexpected but small increase in the number of contracts signed for buying existing homes. The agreements to purchase previously owned homes edged up 0.5% sequentially last month, defying expectations for a modest decline.
Meanwhile, the number of such contracts dropped 1% compared to September 2017 – marking the ninth consecutive fall – which indicates the positive trend might not be sustained in the coming months.
Latest data reveal an unexpected but small increase in the number of contracts signed for buying existing homes
A region-wise break-up of last month’s numbers shows a mixed trend, with Northeast registering a 0.4% decline and Midwest witnessing a 1.2% increase. Year-over-year, the two key markets recorded declines of a 2.7% and 1.1% respectively. With a 1.4% decrease, South registered the biggest monthly fall. West, where homes are the most expensive, jumped 4.5% sequentially but dropped 7.4% compared to last year.
There have been signs of a recovery on the supply front since the beginning of the second half, but by that time affordability came under more pressure. The price hike brings cheer only to the realtors and those who have already bought residential units at reasonable prices. However, some surveys suggest that prices have started cooling in several US cities, in response to the downbeat buyer sentiment.
Meanwhile, experts dismiss the concerns that a further tightening of the market would lead to a bubble-like situation akin to the sub-prime crisis more than a decade ago, citing the underlying stability of the sector and the strong economy.
Earlier, statistics published by the Census Department showed that new home sales dropped 5.5% in September, compared to August, and 13% year-over-year. The number of persons filing for mortgage applications was unchanged from September 2017.
Follow our Google News edition to get the latest stock market, earnings and financial news at your fingertips
Most Popular
What to look for when CVS Health (CVS) reports Q3 earnings
Healthcare company CVS Health Corporation (NYSE: CVS) is all set to report earnings next week, with Wall Street expecting a mixed outcome. The company has been facing challenges in certain
eBay (EBAY): A few factors that helped drive growth in Q3 2024
Shares of eBay Inc. (NASDAQ: EBAY) stayed green on Friday. The stock has gained 32% year-to-date. The ecommerce leader delivered revenue and earnings growth for the third quarter of 2024,
CVX Earnings: Chevron reports lower revenue and profit for Q3 2024
Energy exploration company Chevron Corporation (NYSE: CVX) on Friday announced third-quarter 2024 financial results, reporting a decline in net profit and revenues. Net income attributable to Chevron Corporation dropped to
Comments
Comments are closed.