Tuesday, September 17, 2013 / by Carlos J Higareda
Housing Frenzy Starting to Slow?
The rapid gains in home prices — by double-digit percentages in some areas — may be easing in many housing markets.
Following a yearlong rebound, the real estate market is showing signs of slowing amid rising mortgage rates, a decrease in investor purchases, and inventory shortages, The Wall Street Journal reports.
"It's clear there will be some moderation in demand," Lawrence Yun, chief economist for the National Association of REALTORS® told the Journal. Yun says that home-buyer foot traffic at listed homes, which is measured by the use of electronic lockboxes by listing agents, showed a “measurable decline” in August.
The new-home market will likely see the biggest slowdown, some real estate professionals predict. Builders have been aggressive in raising their prices, and many buyers have been unable to close on homes before the next uptick in mortgage rates, agents note.
Indeed, new-home builders are blaming higher home prices and interest rates for curbing sales. Hovnanian Enterprises Inc. said it’s seen a 12.7 percent decline in new orders during July and August because of rising rates. The company’s CEO acknowledges that it may have been “a little bit aggressive with our price increases.”
A slowdown in real estate sales is common this time of year, and some observers in the industry are welcoming a housing slowdown. They believe recent double-digit price gains are not sustainable and that a pullback will make the recovery move at a healthier pace.
"The market is having a bit of a hangover. We partied pretty hard, and you can't go on partying like that all the time," says Greg Markov, a real estate agent with HomeSmart International in Phoenix.
Source: “Home-Sales Frenzy Eases,” The Wall Street Journal (Sept. 15, 2013)