"Supply is loosening, and clearly that is why it's going to be a slowdown. A lot of people delayed selling at the bottom of the market. As prices rise more, people are in the position to sell."
- Paul Diggle, property economist at Capital Economics Ltd. Prices
Seemingly unaffected by the end of the 16-day U.S. government lockout, the demand for new mortgage remained subdued, while property prices rose slightly, suggesting investors are getting more worried about situation in the world's largest economy and showing unwillingness to invest into property. According to the Mortgage Bankers Association, total mortgage applications plunged 0.6% week-to-week, while applications to refinance posted a 1% drop. Even though mortgage rates remained around same levels even after the government shutdown, mortgage availability was delayed, as the USDA programme did not function during all 16 days. Meanwhile, home sales also fell during September, after a cyclical high during July and August. Additionally, property values rose only 0.3% in August, posting the smallest gain in 11 months.
Weak signals from the property market and economy's inability to create more jobs are reinforcing a view the Federal Reserve will not make any bold comments and hints on a possible date when policy makers can start scaling back its stimulus programme. The uncertainty stemming from Washington has become a serious headache for employers and investors, weighing on both labour and property markets. Taking it into account, analysts believe the Fed will not wind back its $85 billion monthly bond-buying programme until March 2014.
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