- Naroff Economic Advisors
Sales of previously owned US homes declined more than expected in February after hitting the second highest level since 2007, a sign that demand for housing could be weakening due to increasing prices and low inventory. The National Association of Realtors reported that existing home sales plunged 7.1% in February from the preceding month to an annual rate of 5.08 million units, the lowest level since November. Economists, however, had expected a modest decline of 2.6% to a rate of 5.33 million in the reported month. A strong growth in residential real estate is being undermined by a limited availability of properties that has led to higher offering prices. The median price for a previously owned home soared 4.4% from a year ago to $210,800.
Housing was a strong side of the US economy throughout 2015, contributing more than a quarter of a percentage point to GDP growth over the year. Historically, low interest rates and a sturdy improvement in the job market could lend it support, but prices have increased in many markets amid lack of supply, and construction levels for new homes remain historically low. According to the Commerce Department, housing starts increased 5.2% last month, but home builders continue to report land and labour shortages, resulting in delays in projects' completion.
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