U.S. Housing Market Makes Abrupt Slowdown Given Flat Home Sales in October
The U.S. housing market is showing signs of a slowdown with home sale transactions falling flat for the month of October.
Home sales remained unchanged for the month of October as compared to the previous month, according to Redfin. Although it did show a very small increase of 0.3 percent from previous year's levels. This is an "abrupt slowdown," stated Redfin, given the double-digit growth observed in September. Home sale transactions have also slowed in many metros tracked by Redfin, except for San Francisco, Miami, Buffalo and Allentown.
The Redfin report cited that it is still unclear why the sales transactions dropped in October. However, several factors may have caused its downward turn. This includes new rules on closing imposed by the Feds, torrential rain in some parts of the U.S. and low inventory of homes in the market. Another factor was the high sales numbers posted in October 2014, which had affected the year-over-year comparison.
On a nationwide level, the inventory of homes for sale in October dropped 4.3 percent to 587,400 from last year's 595,631, according to the Redfin report. Oakland, Seattle and Denver had the lowest supply of homes on the market. Houston posted the biggest inventory increase, on a year-over-year basis, with an increase of 33.7 percent.
Meanwhile, median home prices continued its upward trend in October and rising 6 percent from last year, based on the Redfin report. Honolulu had the biggest home price increase, with a year-over-year growth of 22.9 percent. Florida's North Port follows with 16.9 percent and Fort Lauderdale with 14.7 percent. Median home prices for these three areas for the month of October was at $510,000, $225,000 and $200,720, respectively.
Although home sales may have shown decreasing numbers in October, it doesn't mean that the housing market will be on a downward trend until next year. According to Lawrence Yun, National Association of Realtors (NAR) Chief Economist, the housing market will still post gains in 2016, although at a moderate pace. The NAR economist made the announcement during the association's annual conference held earlier this week, reports World Property Journal.
Yun expects home sales to expand 3 percent in 2016. This is up from the forecasted 5.3 million pace by year-end to 5.45 million next year. He also anticipates housing demand to remain stable until the end of 2015. However, Yun expects the national median existing-home price to rise 5 percent by 2016.