A new report indicates that sales of previously owned houses in the United States are declining at an alarming rate. According to the National Association of Realtors, the number of existing US homes sold in February was 5.08 million, a seven-percent decrease from January, which saw 5.47 million existing houses sold.
Although a recent Bloomberg survey of 75 national economists predicted that home sales would decline, no one anticipated the market to be this weak. Moreover, the weak housing market exists in all four regions of the U.S., with the Northeast seeing a 17-percent decline in sales of previously owned homes.
Sales of existing homes are a good barometer for the housing market more generally because they usually account for 90 percent of total houses sold in the residential real estate market.
Market watchers said that a major reason for the lack of home sales is an inventory shortage when it comes to residential real estate.
A Decline in First-Time Home Buyers
Another problem with the market – a housing “demand” problem that goes hand in hand with the lower supply – is that many potential first-time home buyers are simply not able to afford to make the kind of down payment needed to purchase a home right now. This is true despite the fact that current home mortgage rates are reasonable when compared to previous mortgage rates. For example, the National Association of Realtors found that the median price of a previously owned house went up by more than $8,000 in the past year.
David Sloan, a senior economist at 4CAST, a major online financial analysis company based out of New York, confirmed that the biggest impediment to healthy numbers when it comes to homes sales right now is that “supply is fairly limited,” which is putting “a restraint on sales.” This has resulted in a bump in rentals and a decline in home purchases as more and more prospective home buyers decide that they may be better off renting for the time being and waiting until real estate becomes more affordable.
For additional information, read the Bloomberg.com article, “Previously Owned U.S. Home Sales Decline More Than Forecast.”
If you are thinking about buying a home in New Jersey, Joel R. Spivack, Esq., is an experienced real estate lawyer who is prepared to assist you throughout the home buying process. Contact Mr. Spivack now to schedule a free consultation.
