"There's going to be a few bumps in the road, but overall we expect the housing market to look pretty decent,"
- Michael Feroli, chief U.S. economist at JPMorgan Chase & Co.
Rapidly growing prices and more expensive mortgage weighed on demand for previously owned houses in June, especially in more expensive markets, the National Association of Realtors said Monday. According to the report, purchases tumbled 1.2% to a 5.08 million rate, down from the previous month's 5.18 million, and below analysts' expectations for a reading of 5.27 million. Nonetheless, it is still second highest level since late 2009.
On a yearly basis, the level was 15.2% stronger, indicating the 24th consecutive month of gains. Still, the latest data was a bit of a disappointment, taking into account recent gains in pending-home sales data, which are considered as a more volatile indicator. One of the reason for a drop in existing home sales, were higher mortgage rates, as the rate on a 30-year fixed mortgage surged above 4% during the summer.
Another major concern for the housing market remains a supply shortage. Given the tight supply, the average price of a house jumped 13.5% last month to $214,200. In order to curb the rapid price growth, U.S. homebuilders will have to ramp up their activity significantly.
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