Rising Credit Standards And Interest Rates Combine With Cold To Slow Home Sales
In many parts of the Unites States, 2014 has begun as a cold year. Across the country, especially up and down the East Coast, U.S. residents have dealt with record low temperatures and more snow and ice than they would have hoped. While it is no secret that cold weather can cause a significant slowdown in the pace of home sales, experts say that a recent drop in the rate of home sales is only partly attributable to the weather.
According to the National Association of Realtors, January saw the lowest rate of existing home sales in more than a year. The rate of purchase fell 5.1 percent to an annualized pace of 4.62 million, which was the slowest rate of home sales since summer 2012. But while the frigid weather played some role in the slow pace of home sales, which decreased in all four of the country’s regions, the weather was only one factor among many.
In addition to the cold weather experts are blaming factors such as relatively low inventory, tighter credit standards among lenders, and increasing interest rates for the slowed pace of home sales. Real estate industry professionals are hoping that 2014 will see a continued improvement in the U.S. economy – particularly hiring – which will allow more buyers to enter the market. They are also hoping that an increased number of new construction homes will help to increase inventory, and hence buyers’ overall housing options. But overall economists seemed unconvinced that the housing market is ready to aggressively forward. A Bloomberg recent survey indicated that, among 79 surveyed economists, the median projected sales figures for 2014 is just 4.67 million.
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