Washington, May 20 (Agency) Sales of existing homes in the United States fell for a third straight month in April as interest and mortgage rates rose and more declines are expected, the National Association of Realtors said Thursday as it released new data reinforcing the notion that the red-hot US property market could be cooling. Existing-home sales fell 2.4 per cent to a seasonally adjusted annual rate of 5.61 million in April, the realtors group said. Compared with April 2021, they were down 5.9 per cent. “I expect further declines in home sales,” Lawrence Yun, chief economist at the realtors group, said in a statement. Mortgage rates were rising, creating less incentives for homeowners to list their properties for concern that the pricier cost of entry could discourage buyers, Yun said. Scarcity of homes put on the market is telling, with just 1.03 million units up for sales, some 10.4 per cent down from a year ago.
Economists polled by US media had expected April sales of existing homes to net 5.64 million units. “Housing is clearly slowing down but is it reversing?,” economist Adam Button said in a post on the ForexLive forum, raising a question that many of his peers were already asking in light of recent data. The numbers on existing home sales came on the heels of data from the National Association of Home Builders on Tuesday that showed that the US home building sentiment hit two-year lows in May. Housing and real estate have important roles in the US economy, with roughly 65 per cent of occupied housing units being owner-occupied and making homes a substantial source of household wealth and home construction a key provider of employment.
In the 2008/09 financial crisis, a crash of the housing market precipitated what later came to be known as the era of the Great Recession. Since then, the US property market has rapidly recovered on the back of economic recovery as well as demand from buyers. Even so, home prices have hit record highs since the Federal Reserve raised interest rates in March for the first time after the COVID-19 breakout to beat inflation running as high as 8.5 per cent, the most in 40 years. The Federal Reserve’s own tolerance for inflation is just 2 per cent per year. The central bank has indicated that a total of seven rate hikes — the maximum allowable under its calendar of meetings this year — are on slot for 2022. More rate adjustments could follow in 2023, until a return to the 2 per cent inflation target is achieved, the Federal Reserve has said.