Rising mortgage rates slow sales of existing homes in September

The Washington PostOctober 22, 2013 

WASHINGTON — Americans bought fewer existing homes in September, a sign that some prospective home buyers have finally started to feel the pinch of higher mortgage rates.

Sales of existing homes fell nearly 2 percent in September from the previous month but are still nearly 11 percent higher than a year ago, according to data released Monday by the National Association of Realtors. The number of homes sold was at a seasonally adjusted annual rate of 5.3 million, down from 5.4 million in August.

September’s drop was largely in line with expectations by analysts, who say that sales will probably slow down for the rest of the year as rising mortgage rates make homes less affordable for some. The average 30-year fixed-rate mortgage reached 4.28 percent last week, according to mortgage-financing company Freddie Mac.

There was a temporary sales spike in August, as buyers rushed to lock in low mortgage rates, pushing sales to a six-year high. But that is unlikely to continue, analysts said.

“We anticipate further declines in the coming months as affordability is getting hit,” said Lawrence Yun, the Realtor group’s chief economist. Affordability fell to a five-year low because income growth hasn’t kept pace with home prices, he said.

Another factor weighing on the housing market, at least temporarily, is the government shutdown, analysts said. Monday’s data release reflects September sales, so the effects of the shutdown will not be clear until next month.

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