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Sales of Existing U.S. Homes Fall as Affordability Drops
Lorraine Woellert / Bloomberg / October 21, 2013
Purchases of previously owned U.S. homes fell in September for the first time in three months, retreating from an almost four-year high as rising prices and mortgage rates discouraged would-be buyers.
Sales dropped 1.9 percent to a 5.29 million annual rate, the National Association of Realtors reported today in Washington. The median forecast of 67 economists in a Bloomberg survey called for the pace to slow to 5.3 million. Prices climbed 11.7 percent, pushing affordability to an almost five-year low, the group said.
Higher borrowing costs will probably hold back demand, slowing the housing rebound that’s been a source of strength for the expansion. At the same time, the damage done to fourth-quarter growth by the partial government shutdown raises the odds that the Federal Reserve will delay cutting back on bond purchases, which means interest rates may stabilize around current levels.