Breaking News

U.S. existing home sales fall, investors pulling back

Economic IndicatorsSep 22, 2014 02:37PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
3/3 © Reuters An existing home for sale is seen in Silver Spring Maryland 2/3

By Lucia Mutikani

WASHINGTON (Reuters) - U.S. home resales unexpectedly fell in August as investors stepped away from the market, but the decline probably does not signal renewed weakness.

The National Association of Realtors said on Monday existing home sales dropped 1.8 percent to an annual rate of 5.05 million units. The decrease was the first in four months, although the sales pace was still the second highest for the year.

"There is no fundamental economic weakness story in the fall. Maybe investors are leaving the market because home prices are too high and (there are) no more bargains to be had," said Chris Rupkey, chief financial economist at MUFG Union Bank in New York.

Economists had forecast sales increasing to a 5.20 million-unit pace. Compared to August last year, sales were down 5.3 percent.

Investors had propped up the market by snapping up distressed properties and converting them into rental units. But last month they accounted for only 12 percent of transactions, which was the smallest share since November 2009.

Although first-time buyers did not step up in August, the retreat by investors means fewer bidding wars and increased opportunities for ordinary buyers that could support sales going forward. In addition, a strengthening labor market is likely to culminate in faster wage growth, bolstering potential buyers.

Equities investors were not heartened, however. Housing shares fell on the data, underperforming the broader market. PulteGroup (N:PHM) dropped 2.12 percent, while KB Home (N:KBH) fell 2.48 percent and Toll Brothers (N:TOL) declined 2.27 percent. The dollar was little moved against a basket of currencies, while prices for U.S. Treasury debt were higher.


"This report indicates an orderly rotation in the distribution of the buyers' profile from investors to first-time homebuyers, which we believe is a first crucial test of the sustainability of the housing recovery," said Millan Mulraine, deputy chief economist at TD Securities in New York.

A survey last week showed homebuilder sentiment hit its highest level in nearly nine years in September, with builders reporting a sharp pick-up in buyer traffic. Lennar Corp (N:LEN), the nation's second-largest homebuilder, said its orders jumped 23 percent in the latest quarter.

The report on previously owned home sales showed all cash sales made up 23 percent of transactions in August, the smallest proportion since December 2009.

The share accounted for by distressed properties - foreclosures and short-sales - was the smallest since the Realtors group started tracking the series six years ago.

First-time buyers accounted for 29 percent of sales, well below the 40 percent to 45 percent that is considered by economists and real estate agents as ideal.

The inventory of unsold homes on the market increased 4.5 percent from a year-ago to 2.31 million in August.

At August's sales pace, it would take 5.5 months to clear houses from the market, unchanged from July. A six months' supply is viewed as a healthy balance between supply and demand.

The improving supply is restraining price increases. The median home price increased 4.8 percent from a year ago, slowing from the double-digit growth seen for much of 2013.

Slower price gains and a leveling off in mortgage rates from their peak last year should help support sales.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. existing home sales fall, investors pulling back

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email