By Dow Jones Business News,
January 23, 2014, 12:57:00 PM EDT
By Eric Morath
WASHINGTON--Sales of previously owned homes finished 2013 at the strongest level in seven years, but a slowdown in
recent months suggests the market is cooling.
Existing-home sales during the last two months of 2013 were the weakest of the year. Sales rose 1% in December from
a downwardly revised November reading to a seasonally adjusted annual rate of 4.87 million, the National Association of
Realtors said Thursday. That was the first monthly increase since July.
Economists surveyed by Dow Jones Newswires had forecast a 4.93 million annual pace for December.
The trade group said 5.09 million existing homes were sold throughout 2013. That was up 9% from 2012 and the best
annual performance since 2006.
"The housing market recovery is continuing, despite a drag from higher mortgage rates," said PNC chief economist
Stuart Hoffman. Sales will pick up as "households that have put off purchasing a home become confident about the economy
and their own financial situation."
Sales of previously owned homes had trended up from early 2011 until last summer when rising prices, limited supply
and higher interest rates undercut demand. Because it typically takes one or two months for a buyer to close on a home,
December's sales data reflect offers made in October and November.
At the end of November, the average interest rate on a 30-year, fixed-rate mortgage was 4.29%, according to Freddie
Mac. That is almost a percentage point higher than rates in early May. Rates have moved up a bit more over the past two
Lawrence Yun, the Realtors' chief economist, said sales should improve from the pace recorded over the past two
months. But he expects 2014 overall to hold flat compared with last year.
"Falling affordability is hindering buying activity," he said. He expects interest rates to reach 5.3% by the end
of the year.
The number of homes on the market increased modestly in December compared with a year earlier, but inventory
remains low at a 4.6-month supply. That is well below the six- to seven-month supply that is typical, Mr. Yun said.
Tight inventories put upward pressure on prices. Thursday's report showed the median existing-home price rose to $
198,000 in December, up 9.9% from a year earlier.
Some other housing gauges have been more positive. Housing starts, a measure of new construction, maintained the
best pace in more than five years in December, the Commerce Department said last week.
Gennadiy Goldberg, U.S. strategist at TD Securities, said weather and other "transitory" factors may have held back
sales of previously owned homes late last year.
"We generally expect housing market activity to accelerate in subsequent months as buyers continue to take
advantage of historically lower mortgage rates and improving labor markets help make homebuyers more comfortable
purchasing homes," he wrote in a note to clients.
Nick Timiraos contributed to this article.
Write to Eric Morath at email@example.com
(END) Dow Jones Newswires
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