Potential home sales for January 2017 declined to a 5.5 million seasonally adjusted, annualized rate – an 81.7% increase from the market’s possibly lowest point in December 2008.
“While higher mortgage rates did reduce the market’s potential, they also will have the positive effect of moderating house price appreciation,” said Mark Fleming, chief economist at First American. “More troubling is the lack of homes for sale, which is causing a ‘matching-trap’ where current homeowners are reluctant to sell because of concerns about the ability to find a home to buy and the likelihood that their new mortgage will have a higher rate than their existing mortgage.”
Year-over-year, the potential for existing-home sales fell by 1.9% versus last year with 107,000 SAAR sales.
Potential existing-home sales at present is 328,000 SAAR or 13.8% below the pre-recession peak in July 2005.
“The housing market’s potential for existing-home sales fell 1.9 percent over the past twelve months, driven primarily by rising mortgage rates,” added Fleming. “The rising rates are influencing potential sellers to hold their properties off market and decreasing affordability, which modestly reduced first-time homebuyer demand.”
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Homeowners are reluctant to sell due to doubt of finding a new home and cheaper mortgage, according to the chief economist of First American Financial Corporation.