Existing Home Sales Stall

Posted: 9/21/2018

Sales of existing single-family homes have fallen for four straight consecutive months according to the newest figures from the California Association of Realtors. In the Southern California region, an eight percent drop in home sales compared to this time last year shows the once hot sales market is slowing down. Home prices rose 0.8% last month, which could be an indicator prices are starting to flatten out as well. Across the country, new home loan originations have dropped to a 4-year low.

What does this mean for the housing market? After years of dramatically increasing home prices, home sellers are now slashing prices at the highest rate in the last eight years. A concern for many would-be homebuyers is that the Fed is expected to raise interest rates this week, which will cause mortgage rates to increase. The mortgage-finance company Freddie Mac was stated that the current spring and summer season housing market has “ended up being a letdown, despite a faster growing economy and healthy demand for buying a home.”

Economists at Bank of America believe that we have reached the peak of current existing sales. "The outcome is that the housing market is no longer a tailwind for the economy but has yet to become a headwind," Economist Michelle Meyer said. "Call it neutral."