Home sales drop to slowest pace in 3 years
WASHINGTON — U.S. home sales fell for the sixth straight month in September, a sign that housing has increasingly become a weak spot for the economy.
The National Association of Realtors said Friday that sales declined 3.4 percent last month, the biggest drop in 21⁄ years, to a seasonally adjusted annual rate of 5.15 million. That’s the lowest sales pace since November 2015.
Hurricane Florence dragged sales in North Carolina, but even excluding the storm’s effects, sales would have fallen more than 2 percent, the NAR said. After reaching the highest level in a decade last year, sales of existing homes have declined steadily in 2018 amid rapid price increases, higher mortgage rates and a tight supply of available houses.
Still, analysts are mostly optimistic about t he broader economy. Most forecast growth will top 3 percent at an annual rate in the July-September quarter, after an expansion of 4.2 percent in the second quarter.
“Housing is no longer a tail wind for the economy, but the headwinds are blowing very gently,” said Michelle Meyer, an economist at Bank of America Merrill Lynch, before the report was released.
Housing will likely weaken further in the coming months. September’s weakness came before mortgage rates jumped further this month to their highest lev- els in seven years. Sales fell 4.1 percent in September from a year ago.
And with rents also stabilizing in many cities, many would-be buyers may not feel as much pressure to buy a home.
“Renting itself may be seen as a better bargain as rising mortgage interest rates, still- rising home prices and sluggish wage growth dent the affordability advantage of a typical mortgage,” said Aaron Terrazas, an economist at real estate data provider Zillow.