KT APPDOWNLOAD

US home sales slowed in March

Buyers contend with rising interest rate repayments on mortgages

A "For Sale" sign is posted outside a residential home in the Queen Anne neighbourhood of Seattle, Washington. - Reuters file

By AFP

Published: Thu 20 Apr 2023, 7:45 PM

Sales of existing homes in the United States slowed in March, the Commerce Department said Thursday, returning to a downward trend that was briefly broken by a surprise surge in February.

"Home sales are trying to recover and are highly sensitive to changes in mortgage rates," Lawrence Yun, chief economist at the National Association of Realtors (NAR), which published the figures, said in a statement.

Homes sales in the US have slowed dramatically over the last year, as buyers contend with rising interest rate repayments on mortgages as a result of the Federal Reserve's aggressive cycle of hikes to tackle above-target inflation.

Existing home sales -- which make up the majority of US home sales -- were down 2.4 per cent in March from a month earlier, to a seasonally adjusted annual rate of 4.44 million, the NAR announced in a statement.

Sales fell 22 per cent from March last year, when existing home sales reached 5.69 million.

The popular 30-year fixed rate mortgage in the United States has risen by almost 1.3 per centage points over the last month to 6.27 per cent, according to the home loan finance company Freddie Mac.

"The market is clearly implying that it is sensitive, even to small changes in mortgage rates," Yun said in a press briefing on Thursday morning.

The median price for existing homes fell slightly in March to $375,700, led by the continued decline in prices in the West of the country.

Home prices saw increases in some regions including the Midwest and Northeast, but they were significantly smaller than the decrease in prices in the West.

"With overall consumer price inflation calming and rents expected to decelerate from robust apartment construction, the Federal Reserve's monetary policy will surely shift from tightening to neutral to possibly loosening over the next 12 months," Yun said in the statement.

The financial markets expect the Fed to begin lowering interest rates later this year, but Fed officials insist they will keep interest rates high until there are clear signs that inflation is falling back towards the Fed's long-term target of two per cent.